Housing Prices and Rents in Australia 1980-2023: Facts, Explanations and Outcomes

TTPI - Working Paper 14/2023 September 2023

60 Pages Posted: 1 Nov 2023

See all articles by Peter Abelson

Peter Abelson

Applied Economics P/L; Macquarie University

Roselyne Joyeux

Macquarie University - Department of Economics; Financial Research Network (FIRN); Macquarie University, Macquarie Business School

Date Written: September 21, 2023

Abstract

Nationally, real median house prices approximately doubled between the early 1980s and 2003 and again between 2003 and 2022. And there was a strong uniformity of housing price changes across Australia. Accounting for quality changes, real house prices rose by about 50% between 2003 and 2022. On the other hand, constant quality real housing rents rose by only about 20% from 1980 to end 2022. Our long-run equilibrium house price model shows the impacts on house prices of changes in mortgage rates, real household disposable income and the national housing stock. Our error correction model finds that if an external shock throws the variables out of equilibrium, the price adjusts to the long-run equilibrium with about 11 per cent of the adjustment occurring in each quarter. Housing ownership has fallen substantially for households under 55 due in part to the rising cost of first home deposits, but average mortgage payments have not risen as a proportion of average household income. Rents have been a broadly constant proportion of household disposable income. However, many low-income households pay more than 30% of their disposable income because household incomes are distributed more widely than house rents. There has also been a major fall in the supply of public housing.

Keywords: Housing, house prices, housing rents, ownership, affordability

JEL Classification: C50, R30, R31

Suggested Citation

Abelson, Peter and Abelson, Peter and Joyeux, Roselyne, Housing Prices and Rents in Australia 1980-2023: Facts, Explanations and Outcomes (September 21, 2023). TTPI - Working Paper 14/2023 September 2023, Available at SSRN: https://ssrn.com/abstract=4591845 or http://dx.doi.org/10.2139/ssrn.4591845

Peter Abelson (Contact Author)

Applied Economics P/L ( email )

3 Wolger Road, Mosman 2088
Mosman, 2088
Australia

HOME PAGE: http://www.appliedeconomics.com.au

Macquarie University ( email )

North Ryde
Sydney, New South Wales 2109
Australia

Roselyne Joyeux

Macquarie University - Department of Economics ( email )

Sydney NSW 2109
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

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