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Market for Housing Industry Project

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  1. Due date:

This project is to be submitted by 11.59pm on Friday 09 may 2020.

  • Lodgement:

This project must be submitted via Turnitin together with the assignment cover page.

You are advised to retain a copy of your project.

  • Penalty for lateness

Late submissions will be penalised at a rate of 10% of the overall mark per day.

  • Table of contents and referencing

Your project must provide a table of contents, references and any appendices, if required. These do not count towards your word limit.

Students are required to acknowledge all sources of information and to include a bibliography of cited texts.  For guidelines on referencing, see a document on Canvas (Assignments    |   Assessment Task 2:  Industry Project   |   Other Project Requirements) titled, “Guidelines for Referencing.”

Note that failure to acknowledge sources and to properly reference information will result in the material not be included in your assessment or a mark deduction for the question. 

Students are to use their own words to demonstrate understanding of the economic theory and its application.

  • Work Requirement:

The project accounts for 40% of the total assessment for this course and should be no more than 800 words. Projects exceeding the specified word limit will be penalised by 1 mark for every 100 words exceeding the limit.


Project Overview

This project provides students with an opportunity to research into life microeconomic aspects of the market for Housing in Australia.

The aim of the project is to give students an opportunity to apply microeconomic concepts and tools acquired in class to a practical context.

Project objectives.

This project covers the following course learning outcomes:

CLO 1: understand the basic microeconomic problems facing society 
CLO 2: understand the interaction of demand and supply in the market place
CLO 3: demonstrate some familiarity with sources of business data
CLO 6: have an awareness of the possible causes of market failure and the role of the government
CLO 7: understand concepts and analyse problems, both numerically and diagrammatically, rather than attempting to memorise and quote correct answers
CLO 8: be able to apply simple microeconomic theory, using appropriate techniques, to some practical problems.



You are a Freelance Economics Consultant who has been commissioned by the Commonwealth Government to analyse the state of affairs in the Housing market in Australia and report your findings to the Government.


Access the IBIS World report on the industry of House Construction in Australia and answer the questions below, in your own words.

To access the IBIS World Report, go to RMIT’s home page. Then select ‘Library’ and launch ‘Databases A-Z’. After this, select the popular database of ‘IBIS World.’ Once in the database, search for ‘House Construction in Australia.’

You are encouraged to search for other relevant information on the website including:

Sydney Morning Herald:

ABC TV, 7.30 Report:

February 2020; ‘Betting on the House’:

ABC Radio National

‘What goes up . . . ‘, 1/10/19, (Tim Reardon, Principal Economist with Housing Industry Association)

‘Low-income, younger Australians bearing brunt of housing affordability crisis’ 5/3/18; guest speaker is John Daley, Grattan Institute:


Part 1.0 – 17 April

Part 2.0 – 24 April

Part 3.0 – 1 May

Part 4.0 – 8 May

Due date 15 May


1. Market Structure

Consider first the market for single-unit house construction (ANZSIC 3011)

Identify the market structure of this industry.  Explain how you reached your decision using economic theory and facts.

                                          (6 marks; maximum 150 words)

2.0 Analysis of the Market

Continue to consider the market for single-unit house construction (ANZSIC 3011)

2.1 Is the price elasticity of demand for single-unit houses likely to be elastic or inelastic? Justify your answer using two determinants of the elasticity of demand.

(5 marks; maximum 100 words)

2.2 According to ABC’s 7.30 Report (12 March 2019), Australian house (new and established) prices increased by 50% in the 5 years ending 2017. Using the market for house construction as a basis, identify and analyse one important condition of demand and one of supply that may have contributed to this extraordinary rise in house prices.  

(8 marks; maximum 200 words)

3.0 Allocative Efficiency 

So far, we specifically looked at the market from the construction of new housing perspective. Consider from now on the market for all housing (Construction of new Houses, new Multi-Unit Apartment and Townhouse Construction and Established Homes).

3.1 Briefly define allocative efficiency. Identify and explain two sources of allocative inefficiency in the housing market.

(7 marks; maximum 150 words)

3.2 Select one of the two sources of allocative inefficiency you identified in 3.1 above, and briefly analyse one policy action the government and /or another organisation can take to improve allocative efficiency. Will this policy significantly reduce prices and improve allocative efficiency? Discuss.

(6 marks; maximum 100 words)

4. Recommendations for the future

Continue to consider the market for all housing in this section as well.

Housing affordability is about whether housing is becoming more or less affordable by a typical household in Australia. Loosely speaking, it is the ratio of the median house price in Australia divided by the median household income in Australia.

Housing affordability in Australia has worsened over the decades. In the mid-1990s, house prices were about 4 times the median income; by December 2018 it worsened to 9 times the median income in Sydney and a little less in Melbourne.

Name and briefly discuss one policy action the government can take which may significantly improve and sustain housing affordability. Once again, consider all housing.

(5 marks; maximum 100 words)

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