Table of contentsIntroductionLiterature reviewConclusionIntroductionHousing affordability has always been an issue of concern as Australia's staggering housing costs have been at the forefront of the approach being taken when we discuss and are concerned about the way taxes are collected in Australia. So, out of the three assignment topics, this one seems to be the most appealing to me, as every Australian household is directly influenced by house prices. This shows the capacity of each household to meet the cost of housing and also to balance its abilities to meet other basic necessities of life. This is the question of one in nine households and it is a real cause for concern. This topic is closely related to every individual living in Australia because housing is a basic necessity for a human being. As a student, housing affordability always seems to be a challenge for us. In the normal context, people confuse "affordable housing" and "affordable housing", but the two are completely different terms. The first deals with the relationship between the amount spent on housing, including rent, bonds granted, prices and other income, while the second focuses on that particular part of society whose income is below the normal household income, i.e. affordable. housing meets the needs of middle and lower class households. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay It is recognized that there are affordability issues across Australia. The most commonly used affordability criterion is the 30/40 rule, which refers to the fact that out of 40 percent of the income distribution, 30 percent is allocated to housing, but this still seems out of reach for households (Australian Bureau of Statistics Household Expenditure Survey, 1998). Using this 30/40 criterion broadly, more than 60 percent of households, comprising primarily low-income households, are experiencing housing stress. A household is said to be in “housing-related stress” if it spends more than 30% of its income on housing. In this essay, I will discuss the different trends in housing costs over the decades and the main reasons behind them. this and how the Royal Commission is responding to the situation. Literature Review In order to deal with the estimation of reasonableness of accommodation in Australia, we have two notable methods: proportion measures and remainder measures. Proportion or ratio measures pay more attention to the relationship between accommodation consumption (costs and expenses) and family income, either as a mean or as a mean. Most of the different accommodation sectors, such as the ABS, OECD and many others, only publish estimates of proportions. As imagined by Gabriel et al. in 2005, the remaining measures highlight a family's ability to maintain a satisfactory lifestyle despite housing costs. According to a 2014 report from the Reserve Bank of Australia which was submitted to the Senate Economic Reference Committee's inquiry into affordable housing, they stated that "Australian house prices have increased by around two-thirds compared to income over the decade or so until the end of 2003.” » (Gabriel et al, 2005). On average, private renters spend a greater share of their gross household salary on accommodation costs than other types of residence. They devote 20% of their gross income to housing costs in 2013-2014,compared to 16% for those who have a mortgage (ABS publication, Housing Occupancy and Costs). The housing affordability graph in Australia shows a sharp decline since the early 1980s. House prices have increased by almost 80% between the last 40 years and 2014. The Select Committee on Housing Affordability has concluded by saying that: - The average house price in metropolitan cities is almost equal to more than 7 years of average income; Despite the country's economic growth and prosperity, nearly a million households live in difficult housing conditions and 100,000 people spend every night homeless on the road. On the other hand, looking at the last 18 months, Australia's housing costs have succumbed. Across the country, the price index fell by 2% year-on-year in August 2018. This can be considered the first decline in property prices in this country in the last five years. To be sure, costs remain 40% higher than normal in 2012, when abundant credit supply and robust external demand began to control the market (Taosha Wang, 2018). Falling housing costs and rising debt service costs reduce optional wages and produce negative effects that can force the use of the family unit and, in this way, prevent the Reserve Bank of Australia (RBA) to increase its monetary rate by 1.5% for a certain period of time. This is the reason for our increasingly conservative outlook in favor of a lower impartial rate and a favorable situation for Australian securities yields. Australian banks are also expected to be negatively influenced, given their extensive direct and implicit exposure to the accommodation sector. Additionally, accessibility to home loans has improved thanks to real estate cooling measures and deeper investigation by banks. Over the past few years, the Australian Prudential Regulatory Authority (APRA), the country's financial watchdog, has taken various measures to calm the accommodation market. In December 2017, the Australian Government established the Royal Commission into Malpractice in the Banking, Superannuation and Financial Services Sector, to investigate unfortunate behavior in the fiscal sector. Weaker investment demand is another compelling explanation for the decline in accommodation values. Overseas demand grew rapidly between 2013 and 2016, particularly from China, and held up 15-25% of new housing supply in the country's largest urban areas such as Sydney and Melbourne. that the Royal Commission failed to understand the work of mortgage agents and the aggressiveness they bring to the market following its suggestions to remove trailing commissions for intermediaries, which the government updated from July in a year. Finance Brokers Association of Australia chief executive Peter White said it was extremely disconcerting that the Royal Commission had to destroy exactly 20,000 private companies for the financial boost of the huge banks, and we believe the government will see clearly about this and continue to work broadly with our industry to improve buyer outcomes. He also added that borrowers trust and support brokers. So there is a reason why over 59% of credits are composed through representatives. Clients have no problem with agent commissions because they get better results using a mortgage broker. Dealers offer better service, more choice and great experts..