Recent Developments in Housing: Prices, Finance and Investor Attitudes

Over the past five years, there has been a sustained rise in house prices in most major cities in Australia. Some part of this rise reflects the longer-term adjustment to a low inflation/low interest rate environment, which has increased the capacity of households to borrow – a development which cannot be repeated. However, this adjustment has also encouraged some new purchasers, particularly investors, to enter the market recently in the expectation of continuing strong capital gains. This article examines the trend in house prices and focuses on the role that investors have played in the housing market in recent years.