Skip to content
Government Federal, Property Real Estate

It’s time the government stops pumping cash into the housing market

RMIT University 2 mins read

Dr Peyman Khezr, Senior Lecturer, Economics, Finance and Marketing 

Topics: HomeBuilder scheme, first home buyer, inflation, housing affordability 

“Previous government interventions, such as the HomeBuilder scheme, have had unintended consequences that have worsened housing affordability in Australia.  

“Subsidies of this nature typically do not cause long-term positive impacts on the market and often result in market disruptions.  

“The solution lies in identifying and addressing the source of the problem, which is twofold: supply and demand.  

“Grants, like HomeBuilder, shift the demand by enhancing affordability for potential homeowners. However, the supply cannot respond rapidly enough in the short term to cater to this surge in demand.  

“Consequently, the price mechanism reacts to the excess demand by inflating the cost of home construction. This increase eventually diminishes affordability to a level where supply can meet demand.  

“Put simply, grants rapidly stimulate demand while supply struggles to keep pace, ultimately leading to a rise in prices. 

“Cash injections in the form of grants only inflate prices and deteriorate housing affordability in the long run.  

“Instead of pumping cash into the housing market, the government should identify sources of market inefficiencies and regulate the market to address these issues.  

“For instance, speculation in the housing market is a significant problem that worsens housing affordability and exacerbates inequality.  

“Adequate regulation could reduce or eliminate speculative demand for homes, allowing first-time home buyers to compete more fairly in the market.  

“Other sources of market inefficiencies relate to the market mechanism itself.  

“Regulations promoting consumer protection would improve fairness in the housing market and benefit home buyers in the long term.” 

Dr Peyman Khezr is a Senior Lecturer in the School of Economics, Finance and Marketing at RMIT and a member of RMIT’s Behvaioural Business Lab. He is an applied market designer with an interest in the housing market.  


Contact details:

Interviews: Peyman Khezr, 0401 667 594 or peyman.khezr@rmit.edu.au  

 

General media enquiries: RMIT External Affairs and Media, 0439 704 077 or news@rmit.edu.au

More from this category

  • Art, Government Federal
  • 23/05/2024
  • 11:49
NAISDA

CENTRAL COAST ARTS TRAINING ORGANISATION RECEIVES RECOGNITION FOR NATIONAL WORK AND IMPACT

The Federal Government has recognised the significant work and national impact of NAISDA, the leading creative arts education and training organisation for Aboriginal and…

  • Contains:
  • Political, Property Real Estate
  • 23/05/2024
  • 06:15
Everybody's Home

People’s Commission into the Housing Crisis unveils human cost

As Australia’s first People’s Commission into the Housing Crisis gets underway today, submissions reveal the majority of respondents are in housing stress and forgoing the basics to cope. The People's Commission, convened by Everybody’s Home, received more than 1,500 survey submissions which show: Three in five (58%) respondents are in housing stress Three in four (76%) of those who rent are in housing stress The top ways respondents are coping with housing costs are by reducing energy use like heating or cooling their homes (52%), avoiding the doctor and essential appointments (45%), and reducing vehicle use (39%) One in three…

  • Political, Property Real Estate
  • 22/05/2024
  • 11:58
Everybody's Home

*** MEDIA ALERT *** People’s Commission into the Housing Crisis

***MEDIA ALERT*** A press conference will be held in Sydney on Thursday morning on the first day of hearings for Australia’s first People’s Commission into the Housing Crisis, convened by Everybody’s Home. WHO: Commissioner Doug Cameron (former Labor Senator for NSW) Commissioner Prof Nicole Gurran (University of Sydney housing expert) National spokesperson for Everybody’s Home Maiy Azize Housing and homelessness organisations + unions WHEN: Thursday 23 May at 11.30am sharp WHERE: Main building entrance of University of Sydney’s RD Watt Building on Science Road, Camperdown NSW 2050. Media are invited to attend and report on all sessions however only the…

Media Outreach made fast, easy, simple.

Feature your press release on Medianet's News Hub every time you distribute with Medianet. Pay per release or save with a subscription.