Residential property market determinants: evidence from the 2018 Australian market downturn

Abstract

PurposeThe purpose of this paper is to validate and uncover the key determinants revolving around the Australian residential market downturn towards the 2020s.Design/methodology/approachApplying well-established time series econometric methods over a decade of data set provided by Australian Bureau of Statistics, Reserve Bank of Australia and Real Capital Analytics, the significant and emerging drivers impacting the Australian residential property market performance are explored.FindingsBesides changes in the significant levels of some key traditional market drivers, housing market capital liquidity and cross-border investment fund were found to significantly impact the Australian residential property market between 2017 and 2019. The presence of some major positive economic conditions such as low interest rate, sustainable employment and population growth was perceived inadequate to uplift the Australian residential property market. The Australian housing market has performed negatively during this period mainly due to diminishing capital liquidity, excess housing supplies and retreating foreign investors.Practical implicationsA better understanding of the leading and emerging determinants of the residential property market will assist the policy makers to make sound decisions and effective policy changes based on the latest development in the Australian housing market. The results also provide a meaningful path for future property investments and investigations that explore country-specific effects through a comparative analysis.Originality/valueThe housing market determinants examined in this study revolve around the wider economic conditions in Australia that are not new. However, the coalesce analysis on the statistical results and the current housing market trends revealed some distinguishing characteristics and developments towards the 2020s Australian residential property market downturn.