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Question: Discuss About The Factors Influencing The Demand For Housing? Answer: Introducation Housing tenure varies based on the demographic factors, current economic trends, employment status as well as wage earning status (Frogner, 2002). Labour cost in future is forecasted to decrease from 99.80 (2017) to 97.62 index points (Trading Economics, 2017). Therefore, the labour market conditions can be considered favourable in accordance with the ability of Jane to buy her own property. The factors of labour market conditions, earnings, intensity to search for a job and mobility play an important role in the task of owning a property (Frogner, 2002). Corresponding to the labour market conditions, wage growth rate is forecasted to increase from 1.90% to 3.3% in the future. Therefore, it is really favourable for Jane to invest in her own property because her ability to purchase and bear its costs will be much easier with continuous increase in the wage rate (Trading Economics, 2017). Correspondingly, any loosening of fiscal or monetary policy in future will increase the housing prices (Parliament of Australia, n.d.). This shall not be feasible for Jane and hence the recent scenario can be regarded as a correct time to purchase her own property. Apart from property investments, Jane can invest in managed funds and shares despite commercial real estate investment being most feasible (Pickworth, 2017). However, investing elsewhere apart from property is risky and since Jane does not have a backup in case of any loss on her investment, it is a better option for her to buy the property rather than staying there on rent, which may turn out to be comparatively expensive in nature (Parliament of Australia, n.d.). Interest Rate Environment Since, the interest rate environment is affected by low inflation, less difference can be found between the policy rates and housing loan rates. Therefore, as per the feasibility as well as fiscal and monetary policy changes, the interest rate environment can be considered favourable for Jane to purchase her own property. In the near future, the home loan might become overtly expensive and hence the first time buyers of properties might be at a comparatively advantageous position (Corderoy, 2017). Hence, the most feasible decision for Jane is to buy her own property based on the additional advantage. The 2017 interest rate is 1.50% and the future forecast is 3% along with the residential ownership rate, which will probably decrease in the future (Trading Economics, 2017). It is really a good time to buy ones own property because of the favourable interest rate environment. Therefore, her ability to buy a property with lower interest rate of housing and loan has made the operations even more favourable for Jane. This shows that labour market conditions have a positive impact on the housing decisions of Jane. Therefore, it can be inferred that the rise in interest rate may lead to the increase in the tenant rent, thereby leading Jane towards a stricter decision-making on the purchase of her own property (Beresford, 2017). Therefore, as per the feasibility along with the changes in fiscal and monetary policy, the interest rate environment is observed to be favourable for the purchase of Janes own property. As per the government policies, the fiscal expenditure is forecasted to decrease in future from AUD 37,475 million to 36,685 million (Trading Economics, 2017). As it was observed that low housing loan rate of interest has been decreasing the interest rates of the policy of Reserve Bank in turn results in the environment of low inflation (Parliament of Australia, n.d.). Thus, it has made the current environment favourable to invest in the domain of housing. Global Economic Influences on the Australian Economy Global economy influences the Australian economy prominently through the macro-environment conditions. For instance, the depression of 1930s as well as in 1970s was the inflation that affected not only the global but the Australian economies (Macfarlane, 2005). As a result of these global economic conditions, a state of imbalance was apparent in the Australian economy with constant increase in the housing prices and debts a (Macfarlane, 2005). However, in the recent context, it was not fully affected by the financial crisis in Asian and global economies, which was possible through proper management. Although there is a risk of fall in the property prices as compared to the historic data, there is a great feasibility evident in the property ownership for Jane (Janda, 2017). Monetary and fiscal policy is thus formulated based on the changes in the global economy and their possible impact in the Australian economy through the implementation of critical analysis procedure and statistical measures (Macfarlane, 2005). Local Property Market Conditions Based on the global conditions and its impact on the local property, it can be stated that market conditions shall also affect the decisions of Jane for their investment. In the recent context, Melbourne and Sydney have been facing inflation, which is the ultimate result of increased demand in the property market (Condon, 2017). The impact of this overheated Australian economy poses a tremendous impact on the affordability of the people particularly in the domain of housing. In addition, their choices relating to investing in the purchases or renting creates an environment of uncertainty as per the decision making similar to Jane (Condon, 2017). Therefore, conclusions can be drawn based on the government policies affecting the local property marketing conditions such as increasing or decreasing the housing price rates among others (Condon, 2017). Global and Domestic Equity Market Performance Equity market has affected the Australian economy, which indirectly or directly poses an impact on the purchasing decisions of the citizens. Gaps between debt and earning yields have also been observed which suggested that merger and acquisition activities must be increasingly facilitated to stabilize the economy (Potter, 2017). These gaps are not favourable because there was an increase in the value stocks prices and quality, which in turn results in the rise of interest rates (Potter, 2017). This shall also have negative impacts on the investment decisions of Jane, wherein her objectives shall not be fulfilled as expected. Posing an impact on the equity market performance, the global policy has become unsustainably low and has started to deflate. Therefore, there tends to be evident instances of uncertainty in the policy making (Potter, 2017) References Beresford, 2017. Will interest rates hit 10%? , Property Investor, viewed 20 September 2017, https://www.apimagazine.com.au/property-investment/will-interest-rates-hit-10-percent. Condon, T 2017. Heated house market hits a ceiling in Sydney and Melbourne, The Australian, auditing 20 September 2017, https://www.theaustralian.com.au/news/inquirer/heated-house-market-hits-a-ceiling-in-sydney-and-melbourne/news-story/08a7b3f7cdb2feecfbcb15dd82746358. Corderoy, J 2017. Rising interest rates will cool property market, Finance, viewed 20 September 2017, https://www.news.com.au/finance/real-estate/buying/rising-interest-rates-will-cool-property-market/news-story/54bd7bf83fd012cd706de626cc74b262. Frogner, Mari L 2002, Housing tenure and the labour market, National Statistics Feature, pp. 523-534. Janda, M 2017. Australia's economy: The Murphy's Law forecast for 2017, ABC, viewed 20 September 2017, https://www.abc.net.au/news/2017-01-06/murphys-law-guide-to-australian-economy/8163918. Macfarlane, I.J 2005, Global influences on the Australian economy, Reserve Bank of Australia, pp. 1-6. Parliament of Australia, n.d., Chapter 4 - Factors influencing the demand for housing, Former Senate Committees, viewed 18 September 2017, https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Former_Committees/hsaf/report/c04. Pickworth, C 2017, Experts reveal where you should be investing your cash, Finance, viewed 18 September 2017, https://www.news.com.au/finance/money/wealth/experts-reveal-where-you-should-be-investing-your-cash/news-story/b99503c7bde9191f91d976e21b5a98b4. Potter, B 2017. 2017 Australian equity market outlook, Nikko AM Limited, viewed 20 September 2017, https://www.nikkoam.com.au/adviser/articles/2017/02/2017-australian-equity-market-outlook. Trading Economics 2017. Australia | Economic Forecasts | 2017-2020 Outlook, Trading financial accounting, viewed 20 September 2017,