This paper started by describing core facts for house prices in Australian capital cities from 1970 to 2017 and rentals for Sydney from 2001 to 2017. It also outlines the core facts for the key drivers of house prices and rents: population, incomes, interest rates and housing supply.
The central part of the presentation provided general and empirical explanations for changes in house prices, rent and home ownership that have occurred. The presentation also discussed housing affordability for first home owners and renters in Sydney.
The two main conclusions were that interest rates are a far more important determinant of house prices than housing supply and that the major affordability problems relate primarily to low income households and some first home buyers rather than to the wider population.
Peter Abelson studied a B.A. from Oxford University, M.Sc. (Economics) from the London School of Economics, and a Ph.D from the University of London. Peter has over 40 years of consulting experience in Australia and overseas, specializing in public economics and cost-benefit analysis. He also runs regular executive training courses for public servants.
Peter Abelson is the author of Public Economics 3E. His recent work in Australia includes government pricing policy, major transport projects, evaluation of public health programs and hospitals, planning for infrastructure and analyses of housing prices. He has also worked for international agencies in many countries.
From 2001 to 2005, Mr Abelson held a Personal Chair at Macquarie University. From 2006 to 2012, he was a Visiting Scholar and academic at the University of Sydney. From 2012 to 2017, he was the first popularly elected Mayor of Mosman Council in Sydney. He has also been a part-time economic advisor to the NSW Treasury.
Presentation slides and additional material are available at the Applied Economics website.