5 . HOUSING SUPPLY
If population growth is occurring but housing supply is constrained , house price growth ( and rental growth ) will occur due to the shortage . Although housing supply is the most direct way to ensure affordability , it ’ s also the most complicated . Right now , we ’ re in an environment of constrained housing supply due to rising construction costs and this is likely to be a key factor in keeping house prices high rising interest rates .
6 . SENTIMENT TOWARDS PROPERTY
Although interest rate increases can explain the most recent slowdown in house prices , sentiment towards housing is also a factor . Last year , it was a seller ’ s market - prices were moving quickly and the number of people bidding at auction hit record highs . Since the start of the year , the market has firmly moved into the buyer ’ s favour as sentiment has turned .
7 . TAXATION
Taxation can be used as both a deterrent to buying , as well as an incentive . Generally it ’ s used to drive certain behaviour - for example , negative gearing ensures we have enough rental housing while stamp duty reductions are used to encourage first home buyers . While it does achieve certain goals , it can often drive up ( or down ) prices .
8 . URBAN REGENERATION
Urban regeneration can result in significant price increases over a prolonged time period . Within large cities , this generally happens when older people move out of a suburb and young people move in their place . It can also be driven by more subtle drivers such as a renewed retail precinct or traffic calming within a neighbourhood .
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