Effects of Housing Fluctuations
To protect against fluctuations across markets, Economists, businesses and governments often put in place legislation to try and restrict certain parts of the market behaving in certain ways. Now this may seem authoritarian, but they will say that in doing so, it does stop financial and economic crashes, such as the one still being felt across the world. It is the exact reason why restrictions, specifically ‘loan to value restrictions’ were put in place by the Reserve Bank in October last year. In doing so, they hoped to decrease the number of people buying houses, to stabilise house prices and their relationship with bank lending. Such restrictions can’t be removed until those in power are satisfied that the housing market is slowing down on a sustained basis. This slowdown is intended to do exactly that to the market, and ultimately it affects those with little money and seemingly little buying power. Even though the market is still hard to predict as certain places face a future very different to others, we are very much at the mercy of how our neighbouring regions behave.
All markets react and behave according to others. After all, those in charge of the markets are us, and as things happen to one part of our lives they affect the others. The babyboomer generation are the archetypal example of such a phenomenon. At the moment, we have a huge generational shift happening, with many young people being unable to support the old. After the second world war finished there was a huge surge in the number of pregnancies, as people celebrated coming out of such a devastating time. It is no surprise then, that as a result of the Easter holidays and Anzac Day, house sales plummeted according to Economists. However, this goes no way to reverse a growing housing trend across the country and compared to this time last year, the amount of house buyers are down. The only saving grace is that house prices are up on this time last year. The one piece of information to resonate is the continued activity of buyers in the million dollar and over category, showing that despite hardships to the rest of the nation, the wealthy don’t get affected.