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Factors that Effect price of House

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Factors Affecting The Price of Rent and House

2669 Downloads I Published: 24 Sep ,2018

Introduction

The people that are well informed have differ question regards to Australian housing is under-valued, over-valued or just right. It is highly depending upon the country financial conditions that can be determined in terms of country interest rate, inflation rate that are highly affecting the loan of housing. The inflation rate also affecting the price of a house. Thus, if there the house loan is depreciate that means that there is an increase the rate of interest and inflation rate. Whereas, the home loan is depreciating its means that there is a decrease in the inflation rate as well as inflation rate (Frañczuk,2013). Therefore, most of the people are confusing whether to buy or purchase house that are directly depends upon the certainty or uncertainty of a country conditions. In this present assignment there is a mainly discussion on whether the person buy or rent the house for an accommodation purpose it is highly depending upon the economic condition of a Australian country. Thereafter, there is an also discussion upon the factors of demand and supply that highly affecting the price of housing and rent in next 10 years.

There are various factor of demand and supply that are highly impacting the price of housing and rent in the next 10 years. These factors are describing as follows: -

Demand (Factors)

Interest rates- Interest rate basically a rate of interbank changes in the form of treasury bills etc. Due to change in interest rate, it will effect of purchasing power of individual positively or negatively. Interest rate affect in housing in such a way that, if interest rate was increases than the houses are available at an affordable price (Kim, Lee and Lee, 2014). Sell of home will rises and consumers are able to take low cost loan easily. If the interest rate was decreases, then house prices will increase.

Lending conditions- The lending conditions such as mortgages which was provided by banks for willingness of taking house. If bank gives mortgage with high multiples, then the demand of house will be higher. Banks which provide mortgage is depends on strength of interbank lending sectors. If bank gives lower mortgage in income multiples than the demand of house will be decreases.

Demographics- Demographics factors includes population, and number of reasons such as marriage, children, cases of separations or divorce etc. which affect the housing and rent. If all such factors are increases than the rate of house will be increases. If there were high number of persons who have desire to get a house so that in this case the demand of house will also increases as per the population. So that demographic factors make a direct influence in demand of house.

Immigration- Immigration is same as Demographic factors. When person shift one place to another place, they require house for living. So that such migration factor also makes an impact on house rate or rent prices (Wang, 2015). When there were increases in immigration rate than the house price will also be increases. Migration is done by special location such as any location which provide employment, education, healthcare services etc. In such areas their house price was high.

Government policies- There are some government policies which also affect the demand of housing and rent. Govt charges tax on housing, so that taxation policy will also make an impact in housing. Govt charges wealth tax, Income tax or any kind of taxes on individual's incomes. So that if the tax rate is higher than the price of house rate will lower and If the tax charges by govt is lower than the price of house are higher.

Home- owner grant- Home owner grant is grant which was provided to home owner, who can buy their home in first time by offering $7000 grant. Such grant is free from tax and but it is restricted in some states where the property price is change. It requires only for an Australian citizen, person does not buy their own property in it, person having 18 years above age or not the person or person's spouse can make claim on it etc. So that all these factors which is related to home owner grant make an impact in home pricing.

Supply(Factors)

Land release- Land release objective is to increases the effectiveness of survey and operation activities. Its main motive is to release the social group who live in a community is to be release from mine remnants of war contamination. This process overcome the challenges of land requirement for person's living. So that land release affects the supply of house rate because if the price of land will high than the supply of house rate will be increases and if the price of land is low than the supply of house will be decreases.

Apartment versus housing- The Cost of apartment and house are differ to their location, size, recent renovations, number of rooms, state etc. In home their owner pays their loan payment in the based on credit risk and employment status. Home also carry the extra cost such repair and maintenance. But apartments and home both are shares same living space (Narajabad and Monnet, 2012). The main difference of home and apartment are the control on space. Apartments rental structure are different from home rental structure. So that all these kind of factors will affect the price rate of home. In such a way, if apartment's prices are low than there will be high supply of apartments as compare to home or if home prices are decreases than the supply of home is increases.

Micro lot property- Micro property includes such property which are allotted at micro level in urban areas. So that there are any changes in micro property, it will automatically affect the price of home.

From the above excel sheet in which there is figures in tables show the data regards to buy and rent. Under which, in which the house value is appreciate over a 30 years it is due to because there is increase in the income growth rate goes upwards that will be 1.00% in 1 years,2 years 3.00%, 5.00% in 3 years, 7% in 4 years and so on. Thereafter, in the case of lease a house the inflation rate will be constant 7% over a 30 years due which it affects the lease fee over next 30 years that will be also appreciating and the lessee have to deposit rent bond at the initial stage that is 25,00,000. The difference among the buy net value and rent net value over a next 30 years for which it has been analyses that the Australian people have to make rent decision rather than buy accommodation.

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Conclusion

Demographics factors includes population, and number of reasons such as marriage, children, cases of separations or divorce etc. which affect the housing and rent. If all such factors are increases than the rate of house will be increases. Furthermore, Land release objective is to increases the effectiveness of survey and operation activities. Its main motive is to release the social group who live in a community is to be release from mine remnants of war contamination. This process overcome the challenges of land requirement for person's living.

References

  • Narajabad, B.N. and Monnet, C., 2012. Why rent when you can buy? a theory of repurchase agreements. In 2012 Meeting Papers (No. 647). Society for Economic Dynamics.
  • Kim, K.H., Lee, C.M. and Lee, Y.M., 2014. Rental housing system and housing market volatility: Monthly‐rent based vs. asset‐based systems. The Global Financial Crisis and Housing–A New Policy Paradigm, pp.296-312.
  • Frañczuk, M., 2013. Rent to Buy a Home–basic principles of the system. Comparison against the Polish law. World of Real Estate Journal (Swiat Nieruchomosci), (84), pp.32-37.
  • Wang, G.J., 2015. Revisit buy versus lease/rent analysis. International Advances in Economic Research, 21(3), pp.355-356.
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