Research Papers

Real Estate Market Analysis Report

The real estate market in Sydney comprises land trade and commerce and its permanent fixtures. According to Saggers (2017), the real estate in the city grew by 1% from 1990 to 2015 fiscal years. Nonetheless, 2015 was characterized by high inflation in property value in Sydney and all the neighboring cities. The federal government of Australia imposed strict policies and regulation in Sydney to control the properties’ prices. Therefore, 2017 experienced a drastic fall in the property prices up to 12.2% (Saggers 2017). All of the real estate property in Sidney is currently experiencing global media attention due to the theoretical Sydney Property Bubble.

Sidney property industry can be categorized as a close-perfect market considering the relatively small scale nature of the industry in the city and the flexibility of transport and renting systems. More than 1,650 housing agents and brokers rely on the real estate market in the city.

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Similarly, most of the clients and sellers in the cities involve advocates and lawyers in the trading process, who do specific market and government research for them thus enhancing the quality information in the market (Crossley 2019). Besides, all the agents sell the same product with minimized value addition hence the small range of prices. Government and federal policies ensure healthy competition and information dissemination in the real estate market. The guidelines also imposed strict policies against Foreign Direct Investment (FDI) in 2016; thus, the sector is not affected by external market and demand forces (Crossley 2019). Therefore, a new entry in the market is countered by minimized restriction from contemporary participants (Crossley 2019). A new seller, however, has to achieve the threshold government and market requirements and capital, respectively.

The entrance of the new firm in Sydney’s real estate market increases the supply of the housing products, while the demand remains the same. The market change, therefore, moves the demand and supply equilibrium to the right (Crossley 2019). Due to the optimized market reach brought by the new firm, the quantity demanded also increases (Crossley 2019). However, since all real estate agents are free to sell and buy any product all around Sydney, the entry would not affect price discrimination significantly.

Despite the specific changes in the equilibrium, the net impact of a new firm in Sydney’s real estate industry is negligible. Therefore, the suppliers’ market contribution in the city cannot be adversely affected provided their continued professionalism (Crossley 2019). Correspondingly, the net demand changes due to target acquired through awareness created by the new firm in the market, causing insignificant changes to the market.

Since the entry of a new player does not affect the demand and supply equilibriums, numerous factors determine the position of the matrix. The prices of the houses are directly and indirectly proportional to supply and demand in the city. The peak of the media houses tagged at $1.2 million in mid-2017 encouraging the entry of new suppliers in the industry. The existing providers were also willing to provide more products than before (Crossley 2019). Contrariwise, the rising prices of the media houses discouraged buyers from purchasing them.

Similarly, the characteristic of the product and consumers affect market demand and supply equilibrium. Saggers observes that houses with high tech integration, near the city core, and accommodating more than three car-parking spaces have higher demand among the city workers, while families tend to be interested in the suburbs (2017). Besides, the top income earners, above $10,000 a month are usually interested in housing facilities located on Sydney’s outskirt while the lower earners target the mid-class areas of the city.

The New South Wales federal government imposes policies that protect the demand and supply equilibrium from FDI’s influences; therefore, minimizing external impacts. Furthermore, high fines on inappropriate advertising, exceeding beyond market range, and corruption in the industry reduces the price changes (Saggers 2017). Finally, the government has also invested in the real estate industry in the city, thus enhancing competition among private firms, which forces the latter to provide quality at fair prices (Saggers 2017). Other factors of Sydney’s real estate industry’s demand and supply equilibrium are expectations, rates on currency and capital, population, trends in the neighboring cities, timing, and purchasing options such as mortgages and higher purchases.

Small and expanding families are the principal buyers of the real estate products in Sydney and are greatly affected by the changes in housing equilibrium. Similarly, stable businesses and corporates are opting to buy premises and business apartments to avoid maintenance fees, thus enhancing their marginal profitability in the long run (Crossley 2019). Institutions such as hospitals, schools, and NGOs are currently buying real estate products in the city due to the conducive environment and the high population.

Sydney Harbor is a true representation of the practical demand and supply equilibrium in Sydney’s real estate market. The town’s element has more than 600 and 650 households and houses respectively controlled by approximately 20 real estate agents as shown by Sydney Harbour Homes for Sale, Rent & Price Trends. The supply of the housing product is 36 while demand depends on the pricing and characteristic of the product (Sydney Harbour Homes for Sale, Rent & Price Trends). Assuming that all the houses are of the same aesthetic level, the price of the product ranges from $240,000 to $400,000.

Increase and reduction of demand move the demand curve right and left respectively, thus shifting the balance on the same projections keeping the supply factors constant. On the other hand, conducive and adverse supply conditions move the supply curve left and right dragging the equilibrium towards the same projections hence maintaining demand factors and influences of the market constant.

The real estate industry in Sydney, Australia, is experiencing minimized external forces. The market, also, shows a close-perfect characteristic due to the existence of many buyers and sellers, minimized restrictions and influence on entry, high-quality market information, almost-similar product, and minimized federal influence on the local market. However, factors that have significant influences on the market equilibrium include changes in federal regulations, inflation of the product, characteristics of the consumers, and product. Finally, demand and supply curves’ intercession form Sydney’s real estate equilibrium.

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Reference List
Crossley, A 2019, Introduction. In the Australian Property Investment Handbook 2018-2019 (2nd ed., pp. 12-56). Sydney, New South Wales: Australian Property Advisory Group.
Sydney Harbour Homes for Sale, Rent & Price Trends. Price Trend Based on MLS Sold Data. Available from: <>.[4 June 2019].
Saggers, S 2017, The future of property investing in Australia: Don’t risk buying real estate before you read this book!  Surrey Hills, Vic. Sam Saggers