Learn Why is Australia’s Property Market So Out of Control at the moment ?
“With the exceptional growth in the property market over the last year, more and more buyers are finding themselves squeezed out. But what are the cause of soaring house prices? And what are the solutions? ” – Realestate.com.au
Based on this Dallasfeed Report
3 Top Reasons that led to a Surge in Housing Demand in the United States, a Similar view could be adopted for the Australian Market
- During the pandemic, large transfer payments that included stimulus checks and extended/expanded unemployment benefits boosted household incomes. As a result, household incomes and housing demand did not collapse even when unemployment spiked to a seasonally adjusted 14.8 percent in April 2020 (from 4.4 percent a month earlier) in the U.S.
- In addition, very low mortgage interest rates, reflecting market forces and very accommodative monetary policy, raised the demand for housing. The Federal Reserve cut its policy rate to the effective lower bound (0 percent), purchased large quantities of Treasuries and mortgage-backed securities (quantitative easing or QE), and provided forward guidance that the fed funds rate was likely to remain at the effective lower bound for an extended period.
- The pandemic also boosted the demand for housing by increasing the need to work from home and for more socially distanced housing away from dense urban areas, especially in major cities. The former is reflected in a rise in relative prices of larger suburban homes and the latter in a rise of single-family housing relative to multifamily construction.
