A Recent Report Released by Monash University Researchers Has Suggested

question 15

Essay

A recent report released by Monash University researchers has suggested that housing affordability in Melbourne is falling sharply and that Melbourne is now ranked second only to Sydney as the least affordable city for home buyers. A key indicator used in housing research is the median house price and median household income multiple. The research showed that the median Melbourne house price was $576,000 and the median household income was $67,700. Thus the multiple for Melbourne is 8.4 (compared with 9.2 in Sydney). Factors explaining the decline in housing affordability are largely economic: escalating land prices, increasing construction costs, failed planning policies and shortages of land in metropolitan area. Briefly discuss the
implications of housing affordability in Melbourne from a consumers' perspective.

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Definitions:

Net Present Value

This is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used to assess the profitability of an investment.

Original Investment

The initial amount of money put into a project, asset, or company, intended to generate earnings or profit.

Cash Flows

This refers to the net amount of cash and cash-equivalents being transferred into and out of a business, vital for assessing its financial health.

Capital Investment

Funds invested in a firm or enterprise for the purposes of furthering its business objectives, often in assets intended to produce goods or services.