Australia's Growth in Households and House Prices

Creina Day

Australian Economic Review, 2018, vol. 51, issue 4, 502-511

Abstract: Real house prices rise in Australia amid growing concern of an impending correction. This article explains why the household formation rate has risen with strong population growth due to higher net immigration and average household size levelling off due to population ageing. An intertemporal model is developed to analyse the effect of an increase in the household formation rate on the housing market. I find that real house prices rise over time if the rate of household formation outstrips the rate of housing supply. Under forward looking expectations, a rising household formation rate could explain rising real house prices relative to the present discounted value of future wages. The results explain why real house prices may exhibit an upward trend despite population ageing and how government planning could have an impact.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1111/1467-8462.12280

Related works:
Working Paper: Australia's growth in households and house prices (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecr:v:51:y:2018:i:4:p:502-511

Ordering information: This journal article can be ordered from
https://ordering.onl ... 7-8462&ref=1467-8462

Access Statistics for this article

Australian Economic Review is currently edited by John de New, Viet Hoang Nguyen and Susan Méndez

More articles in Australian Economic Review from The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().