For Australians, a national decline in housing prices is bringing new hope for affordable home ownership. Unfortunately, standing between hope and a new house are the banks.
Housing industry pundits regularly reassure prospective buyers that building more housing will increase supply of houses and lower prices. They refer to the ‘laws of supply and demand’ that will ensure that houses become more affordable. The laws of supply and demand, however, do not take into account the need for almost everybody to finance a housing purchase through a loan from a financial institution. When a loan is needed to finance a house in a falling market, banks can leave prospective home buyers spinning their wheels, no further ahead than they were when prices were higher.
This is a problem that plagues affordability of homes everywhere, not just in Australia. How does it happen? Read more at ABC News: Lower house prices not translating into more affordable housing, as loans become harder to get
