A new modeling carried out by researchers from the Reserve Bank of Australia (RBA) revealed that supply and demand were not the main reasons for soaring real estate prices over the past decade, according to a study by the Reserve Bank of Australia analyst. Instead, they explain, soaring prices were due to falling interest rates.
House prices have risen since the global financial crisis, mainly in Sydney and Melbourne, where median prices have almost doubled in less than 10 years.
"We construct an empirical model of the Australian housing market that quantifies the interrelationships between construction, vacancies, rents and prices. We find that low interest rates, which in part reflect long-term global rates, largely account for the rapid growth in housing and construction prices in recent years, "said Trent Saunders and Peter Tulip , researchers at the RBA, in a statement.
According to this model, the relationship between the price of housing and income in the country would have been much lower than it is today, without the reduction of interest rates.
In addition, the data suggest that higher prices and lower borrowing costs triggered the reaction of the promoters' offer.
"The model estimates that the reduction in real interest rates (real interest rates, minus inflation) explains the bulk of soaring housing prices and a large part of the boom in housing investment, "said Saunders and Tulip.
Research has also shown that an increase in housing supply increases the vacancy rate and reduces rents, but these effects are countered by the effect of the increase in vacancies. income. This explains why neither the vacancy rate nor the rents are substantially modified on the net.
In addition to interest rates, the acceleration of population growth, driven by increased immigration, contributed to the increase in the ratio of house prices to income. The degree of impact, however, was not the same as the reduction in interest rates.
Australia's unemployment rate has fallen to its lowest level since 2011, but the economy has slowed significantly in the second half of 2018. Inflation is still below the 39; goal of the RBA, forcing a growing number of economists to believe that the RBA will have to reduce the cash rate again this year.
Interest rates are at their lowest for over 50 years, so there are excellent rates available. The best thing to do is to compare the rates of all the lenders. Let us help you solve this problem – Compare home loans now
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