Toronto Metropolitan University

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Australia's Economic Response to the Global Financial Crisis and Its Housing Markets

posted on 2023-07-19, 15:44 authored by Dogan TirtirogluDogan Tirtiroglu

This chapter presents a summary of the Australian banking and real-estate markets. It further discusses the policy developments used to fight off the adverse expected consequences of the global financial crisis (GFC). The chapter concludes with a review of the current state of both the markets. Essentially, there is a consensus that Australia's response to the GFC has been a success story so far. As for housing, the policymakers have implemented policies as part of a massive fiscal response package to the GFC, which has aimed to sustain high property values in Australia. Therefore, relatively low mortgage rates have allowed all potential home-owners to maintain a healthy appetite for purchasing houses. In addition, Australian banks have been sourcing their financing needs mainly from the international markets for some time now. Inflationary pressures are a likely outcome of the massive budget deficits around the world, once the world economies pull themselves out of the GFC. Further, the Australian economy has its own homemade concerns for inflation. Thus, increasing borrowing costs, both domestically and internationally, for Australian banks and, consequently, for all Australian mortgage borrowers with a VRM contract, are not unlikely in the near future.




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