a rise in the amount or size of something: price/tax increases A well located house cost $1,000,000 last year - an increase of six percent. Any increase in production of well located houses would be helpful.
Total demand for property is determined by population size and changes in the structure of the population caused by migration and long-term changes in the birth and death rates. An aging population will increase the overall demand for property.
As expected, there tends to be an inverse relationship between house prices and demand. As with all goods, the inverse relationship can be explained with reference to the income and substitution effect. At higher prices, real incomes will fall and individuals will reduce their demand. In addition, at higher prices, the alternatives to owning a property, such as renting, appear more attractive and individuals are more likely to rent. When house prices are lower the reverse is true, with individuals encouraged to buy because of a rise in their real income and because renting seems less attractive. However, the demand for property is also partly speculative, so that a rise in prices can lead to a rise in demand as buyers anticipate a speculative gain.
Total demand for property is determined by population size and changes in the structure of the population caused by migration and long-term changes in the birth and death rates. An aging population will increase the overall demand for property.
As expected, there tends to be an inverse relationship between house prices and demand. As with all goods, the inverse relationship can be explained with reference to the income and substitution effect. At higher prices, real incomes will fall and individuals will reduce their demand. In addition, at higher prices, the alternatives to owning a property, such as renting, appear more attractive and individuals are more likely to rent. When house prices are lower the reverse is true, with individuals encouraged to buy because of a rise in their real income and because renting seems less attractive. However, the demand for property is also partly speculative, so that a rise in prices can lead to a rise in demand as buyers anticipate a speculative gain.
So it is Housing Formation and Not Consumer Confidence/Sentiment.
You could have just said that in the 1st place.
So that brings ne to my next question....
Skammy made this statement:
Quote:
he reason is that confidence is lacking in Perth and this reduces demand as people are spooked by doomsayers.
When people in Perth feel confident to buy again they will borrow again - no amount of reduced interest rates or looser lending will move the market until confidence improves.
I think you actually agree with me on this one Andrew - you are just late to the debate.
So your confirming that she is wrong about confidence or lack thereof reducing Demand.
So it is Housing Formation and Not Consumer Confidence/Sentiment.
You could have just said that in the 1st place.
So that brings ne to my next question....
Skammy made this statement:
So your confirming that she is wrong about confidence or lack thereof reducing Demand.
skamy is talking abut people having the confidence to buy. If they don't have that then they still need a house to rent, so the need is still there but satisfied in a different way.
If they choose to rent then an investor must buy one to fill that demand.
Do try to keep up.
Take risks - if you win you will become wealthy, if you lose you will become wise
skamy is talking abut people having the confidence to buy.
I'm pretty sure skammy is talking about Rising prices.
Post 160
Quote:
WHY DOES THE MARKET RISE?
Demand Andrew.
The demand comes first and foremost.
We are all acknowledging that reduced credit can reduce demand, but once a market has reached its maximum demand no amout of throwing credit at it will increase prices.
Veritas thinks that people just borrow everything possible - you know this is not true Andrew, it is really only FHBs that max out debt and they are a very small part of the market.
Most people in Australia do not max out their credit cards never mind their home loans.
There is a time when people may engage in excessive risk taking eg in Ireland or Dubai precrash as people had been seeing price growth for so long they thought it would never end and even then the numbers of such borrowers were small. The major problem with both those economies was stupid bank lending to developers not to home buyers.
People in Perth can borrow as much as their Eastern state peers relative to wages - so why are Perth median prices so low when our wages and borrowing capacity is just as high if not higher?
The reason is that confidence is lacking in Perth and this reduces demand as people are spooked by doomsayers.
When people in Perth feel confident to buy again they will borrow again - no amount of reduced interest rates or looser lending will move the market until confidence improves.
I think you actually agree with me on this one Andrew - you are just late to the debate.
Skammy is Clearly talking about confidence creating demand. Not Housing Formation.
I'm trying to keep up but how can I join the dots when no one will give me a straight answer.
There is an important speculative element in the demand for property. Consumers often base their current demand for property on expectations of future price changes. Rising house prices encourage speculation and falling house prices discourage speculative buying.
There is an important speculative element in the demand for property. Consumers often base their current demand for property on expectations of future price changes. Rising house prices encourage speculation and falling house prices discourage speculative buying.
Bardon thats the 4th attemp at misdirection.
Why can't you answer my question?
Skammy states clearly that confidence creates Demand and you also clarified it.
Rufus says Housing Formation creates Demand so which is it?
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