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This Housing Mechanism in Melbourne Assignment Help discuss Australian housing market report, Melbourne’s housing prices, a buyer’s tax (specific tax) on housing purchases, housing policies or measures to stabilize the housing markets etc.
Question 1: In your own words, summarize the article, “Australian Housing Market Report,” Prepared for National Australia Bank Ltd, by RP Data (November 2014). In particular, what are the main messages of the article?
Summary of the article
The housing mechanism in Melbourne assignment help article is all about the real estate how it booms from decline, as it was in decline position in the end of 2008 and now it is in the great boom from last 12 months up to September 2014. There is big boom in the market of the real estate, as there is rise in the prices of the houses. Index of the home prices of the capital city states recorded growth of 2.9% in the value throughout the quarter of 2014. A big boom of growth is generated from the two big cities that are Sydney and Melbourne. These both cities are main players of the growth in the value of real estate. There is increase in the value of homes of Sydney by 51.2% and the home values of Melbourne increases by 46% while the values of the other cities are increases by 34%. Both Melbourne and Sydney have shown strong experience in rise of the value (Arulraj, 2012).
As there is rising in the value of homes the transactions are also increasing. Record of sales in the year as compared to previous year the sales is increased by 9.8%. 487581 homes were sold across the country during the period. But, the combined city level was recorded sales of 219675 houses. Total sales all over the capital cities were recorded 9.8% higher than the previous year. Melbourne and Sydney recorded the highest sales during the period. The sales recorded in the cities Perth, Darwin and Canberra is low. Sales of Hobart and Brisbane recorded high growth.
The inflation is recorded 2.3% in Sydney during the 12 months while in the cities like Melbourne and Hobart there is increment in the rental value. Perth and Canberra both have recorded falls in the value of rent. As in September 2014 the total rental yield recorded in capital city was 3.7% and the unit recorded was 4.5%, gross rental yield was falling rapidly. As at individual level the rental yields have fallen all across the cities as well as in the capital cities. Melbourne and Sydney have the lowest yields in rent of any capital city at 3.4% and 3.8%. As looking for housing finance across states shows that lending activity has increased in most of the states. On an average of 12 month basis the investors finalized a 4.5 billion dollar of finance in South Wales in August while somewhere else the investors lending moderate (Wendt, 2011).
Sydney has recorded great increase in the home values of all capital cities during the past years. Sydney has constantly performing well over the years in real estate. Melbourne has recorded third highest increase in the home values among the capital cities. Melbourne has recorded cumulative increase of 18.5% over the periods in the home values. Melbourne has recorded second highest growth rate in home value across the cities. Brisbane has recorded moderate increase in the home values over the past years as it has increment of 6.4%. There may be further growth in Brisbane home values in next coming months. There is just 5.8% increment in the home values of Adelaide over the years. The rate recorded in Adelaide is lower than across the combined capital cities. The home value is moderate over the period across the cities. It is ranked fifth among the capital cities and third weakest city among all the capital cities. Sales volume has risen sharply over the coming months. All over the growth Perth has recorded a cumulative increment of 14.5%. Home values of start rising in late 2011 but it was earlier from all other cities (Arulraj, 2012).
Question 2: Using appropriate diagrams, figures and data to answer: Are the Melbourne’s housing prices overheated? Why or why not?
As shown in the graph the prices of the Melbourne’s houses value is perfectly elastic as it is same as in the 1998 to 2014.
The value of homes of Melbourne’s are overheated once when value increases in 2010 from 2008. Now it is normal again and no overheated in 2014 (Vander, 2010).
With the above diagram we can observe that the prices of the Melbourne housing were adequate and was not enough increasing with the years as the consistent ratios have provided the information adequate to the response provided with the societies response. Also the income factors have greatly influenced the prices of the Melbourne housing which is as the prices are consistently increased in a slow proportion the income rises are in great proportion which is making the adequate benefits in the industry and the prices of the Melbourne housing are nit greatly affected.
Also the policy in the Melbourne housing is concentrating the development of the societies which is not increasing the prices of the houses with the effect of the inflation and other monopolistic features of the government. The program was adequately addresses in the areas of the Australian country and also it was making a proper response in the direction set with the developed areas of the Australian country (Ball, 2010).
With the above graph we can clearly see the prices of the housing that it is at the same place where it starts in 1998 and ends in 2014. The x axis is having the years where the prices have started for the housing in Melbourne organization. In the y axis the prices of the housing are provided which are making the adequate response in the housing industry withthe process classifying by the years.
So in the above graph it can be clearly observed that prices have been initiated in 1998 with the same tempo as it is in the year 2014. Although we can see a sharp dip in the year 2008 which was due to the slowdown and the recession of the economy and a sharp rise in the year 2010 which is due to the injections of the Australian authorities. So we can see that the prices of the housing in the Melbourne was not overheated in any way as the graphs clearly shows us the demarcation and other measures of the industry (Ball, 2010).
Question 3: Suppose that the Melbourne’s housing market is perfectly competitive (i.e., many real estate developers). The city government decides to levy a buyer’s tax (specific tax) on housing purchases.Using appropriate diagrams to answer:
(a). Examine the impacts of this buyer’s tax on the equilibrium housing prices, consumer surplus, producer surplus, and total surplus (or social welfare).
(b). Can an increase in the buyer’s tax raise social welfare?
(c). Can an increase in the buyer’s tax raise city government’s tax revenue?
The impact of this buyer’s tax on the equilibrium housing prices will be it will increase the housing prices as the tax will put a charge on the asset and will increase its cost to the seller or the authorities which will make it more costly to the vendor which is supplying this property to the end customer for its consumption. Hence the end customer will finally pay the prices of the tax as well as the other costs of the housing accommodation which will ultimately turn the project and the housing in cost increasing measures. Although the tax collection is necessary in order to make a proper structure and mechanism in direction of a successful taxation which will serve the other societies requirements (Baum, 2011).
The impact of the taxation on the consumer surplus will be non-impacted as the taxation help is directly collected by the governmentauthorities and also its consumer and producer responsibility to make the adequate contribution in the taxation as per the norms.
The impact of the taxation on the producer will be that they are liable to pay the taxes but the only difference will be that end customer or the consumer will be the only person paying the taxes.
The total surplus or the common welfare will be affected with the taxation as the revenues are finally utilized for the society’s development purposes.
Buyer’s tax increment raise social welfare as the revenue generated by these helps in construction of roads, repairing of societies etc. Also the societies will be helped withthe adequate finance opportunities, which will serve the education, societal hospital and other requirements facilities. This structure will develop the country’s economic development to an extent of the great features in the housing and will make the availability of an adequate finance which can address the countries requirements.
Increment in the buyer’s tax generated more revenue to the government.This helps in the common welfare strengthening and stability as in order to achieve a proactive approach in the development of the organization and other industry requirements. The country will be available with massive extensive policies on the housing where they can address a mass population to approach the industry requirements and other necessities.The impact of this buyer’s tax on the equilibrium housing prices will be it will increase the housing prices as the tax will put a charge on the asset and will increase its cost to the seller or the authorities which will make it more costly to the vendor which is supplying this property to the end customer for its consumption. Hence the end customer will finally pay the prices of the tax as well as the other costs of the housing accommodation which will ultimately turn the project and the housing in cost increasing measures (Tiwari, 2014).
Question 4: Suppose that city government decides to develop a new housing area (i.e., the city government is like a monopolist). Using appropriate diagrams to answer:
(a) If the city government’s objective is to maximize profits, what would be the housing price set in this new area?
(b) If the city government’s objective is to maximize revenue, what would be the housing price set in this new area?
(c) If the city government’s objective is to maximize welfare, what would be the housing price set in this new area?
Under below is the graph which shows the maximum revenue, maximum profit and welfare.
TR stands for total revenue
TC stands for total cost
M and N are breakeven point
AB are the point where there is maximum profit and N is the point where revenue is high while M is the point where the revenue is low these are the points where total revenue is equal to total cost.
TC starts above from 0 and TR starts from 0
To maximize the profit city government has to minimize the cost and maximize the revenue as shown in the graph. M and N are the points where there is no profit and no loss. The point where there is no profit and no loss we called that point a breakeven point. If the govt. has to maximize the profit govt. has to give the price of 15000 dollar as this is shown in the graph by the name total revenue generates and the total cost is 10000 dollar, so the maximum profit earned by government is 3000 dollar. But, when the government put the price of the house 20000 dollar at this point neither profit nor loss as the cost is also same and same as on the price of 10000 dollar. From point M to N govt. can earn profit and AB is the point where govt. can earn maximum profit (Fisher, 2011).
The point on which the govt. can maximize its revenue is at point N but after reaching this point if govt. further proceeds than revenue can be maximum but there is a loss because the total cost crosses the total revenue as shown in the above graph. Revenue of govt. starts from 0 it reaches to maximum more than 20000 dollar but at these points govt. will be in loss. The point of the revenue from where the govt. can earn profit and the point where there is no loss or profit. The govt. start prices from 10000 dollar to 20000 dollar. The point where the govt. can have maximum profit is the point AB this is the point where there is a big difference between revenue and cost is maximum. So, the price at which the govt. has maximum revenue is 20000 dollar but govt. has to take this in mind at this price govt. does not any profit. If govt. have to earn maximum profit than the price of the homes will be 15000 dollar (Strauss, 2011).
If the govt. has to maximize the welfare of the society than the govt. can set the value of the houses is near by 10000 dollars. At 10000 dollars the govt. has no loss and neither has profit. Govt. can set the price as 15000 dollar as at this point govt. maximize its profit and that profit will help in maximizing the welfare of society. Welfare of the society will depends on the govt. expenditure and govt. can’t do expenditure more than its revenue as it will be in trouble as there is deficit in govt.’s account (Wendt, 2011).
Revenue – expenditure = surplus
Expenditure – revenue = deficit.
Question 5: Find at least three countries or economies that have housing policies or measures to stabilize the housing markets. Provide your views or suggestions on the best measure to stabilize the housing markets that could be considered or used in Melbourne.
With the respective discussion on the housing policies the concentration of the paper is developed on the economies which are having stable housing policies and hence with the research in this direction we are available with some of the countries having an adequate housing policies suiting the countries requirements and managing the social security’s schemes (Wiedemer, 2010).
These countries are as follows:
These countries have developed their policies and regulations in the defined direction to make the benefit available to the societies and put the development of the country in priority (Allen, 2011).
We will have a quick look on the countries housing policies to develop a comprehensive understanding and thus to draw the decision in the direction of a favourable and performance measures policies for the effective and viable approach in the industry.
Firstly a great example can be observe with the Brazilian authorities who are developing their cities with a motto line of “My house My life” which is a social housing program launched by the Braziliangovernment for their people. They have classified the income groups and hence are developing their housing according to the earners and providing the adequate and equitable benefit to the society by providing millions of homes.
Secondly the diversity and unity can be classified in the Singapore country with its effective policies on housing which are managed and controlled by the Housing and Development Board. They have developed their areas with the flat based systems in order to achieve a maximum potential of living in these areas. These flat based systems have also helped them to provide schools, supermarkets and other hospitals facilities in their areas only.
Lastly in the Germany country they have developed the housing facilities with the super benefits to the families who are shifting to the government designated places in order to make all the places equally distributed with the resources as well as making the process efficient to approach the diversity. They are effectively utilizing the places of single accommodation to make them utilized for maximum (Allen, 2011).
With all the above measures which have been adopted by the different countries, a combination or a mixture of the housing policies should be approached to make adequate and proper stable housing policies which will exercise the right options utilizing the maximum spaces.
In my opinion the best policy for making a stable housing structure will be as follows:
It should be a structural combination of the above countries which should be covering these three important aspects:
- It should consider the income of the living personnel or the family expense runner.
- It should effectively utilize the place for the maximum potential and should not block a place for a person or two.
- Lastly the places should develop like Singapore culture where flat based systems were developed which will make the efficient utilization of the places and also the structure of the policies will be aligned according to the needs of the society which will be satisfied with the proper places and its effective utilization (Wiedemer, 2010).
Analysis: With the structure provided above based on the analysis of the three countries the effective mechanism of the housing policies have been developed considering the countries which are having an efficient and effective structure of the policies and economical up downs.
Allen, R. H. (2011). Real Estate Investment Strategy. South-Western Publishing Company.
Arulraj, A. (2012). Methodology for real estate market analysis. Serials Publications.
Ball, M. (2010). Markets and Institutions in Real Estate and Construction. John Wiley & Sons.
Baum, A. (2011). Commercial Real Estate Investment: A Strategic Approach. Taylor & Francis.
Fisher, J. D. (2011). Real Estate Finance and Investments. McGraw-Hill Irwin.
Strauss, S. S. (2011). The Unofficial Guide to Real Estate Investing. John Wiley & Sons.
Tiwari, P. W. (2014). Real Estate Finance in the New Economy. John Wiley & Sons.
Vander, L. (2010). The Real Guide to Making Millions Through Real Estate: Start Your Portfolio With as Little as $3000. Entrepreneur Press.
Wendt, P. F. (2011). Real estate investment analysis and taxation. McGraw-Hill.
Wiedemer, J. P. (2010). Real Estate Investment (with CD-ROM). Cengage Learning.