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Australian Housing Market Essay

724 Words3 Pages

In recent years, the contentious issue of housing demand and affordability has been the centre of debate for both the government and home buyers with pricing soaring at unsustainable rates. Such deliberation focuses on the level of government intervention in the Australian housing market, the effectiveness of policies enacted and the adjustments necessary. This broad and encompassing question will be examined through the perspectives of great economic thinkers Henry George and John Maynard Keynes. Both economists approve of demand side changes with George calling for remedial policies through a single land value tax while Keynes proposes on direct regulatory government intervention with macroeconomic policy reforms. Prior to analysing the issue it is imperative to delve into origins of which housing affordability stems from. The housing market serves a vital role not only in providing in demand accommodation for the population but constitutes Australia’s largest store of wealth in which savings of investors and homeowners are directed towards. Whilst …show more content…

George viewed land as a public resource in which each citizen has equal entitlement. He identifies the root cause in the appreciation of housing is attributed to land values rising at a faster rate than economic growth. This notion is formed under the basis that land is not produced meaning supply is constant but at the same time land is necessary for production. Inadvertently, this creates a perpetual cycle of rent accounting for a greater share of total production. Since land is fixed in supply the system of private land ownership permits landowners to reap the exclusive rights and benefits of the land. Simultaneously, landless families are distanced from purchasing their first home and owning land. As a result they are coerced into paying rent to owners to access this essential

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