A Complex System showing the factors affecting the real estate market.
This complex system looks at the effect of the Australian Currency on the real estate market.
There are many factors that affect the Australian Currency, such as, our interest rate compared to the rest of the world, inflation, trade, and balance of payments. I have decided to keep this simple and included a toggle to simulate the real estate market in different times.
When the Australian currency is high, our trade/export goes down (Australian dollar too expensive), which causes the economic growth to decrease and hence decrease the interest rate. This will encourage Australians to purchase properties.
When the Australian currency is low, commodities/trade/export increases (as overseas countries would take advantage of the low currency), this will then in turn cause in increase in economic growth, which will increase the interest rate. This will cause the demand to to diminish. This in turn will cause an increase houses not being bought hence an increase in inflation which will try to lower the interest rate.
This complex system tries to explain the many cycles we have co-existing in a real estate market. A decrease in one part will then be compensated by another part to bring the cycle back to equilibrium. Or adding an additional factor will cause the system great changes along the process. For example, some years back Australia faced a natural disaster. Due to insurances having to pay out the claim, the insurance companies end up buying Australian dollars, which increases the Australian currency. This natural disaster then builds jobs and actually stimulates the economy. This economy growth that was caused by the natural disaster then stimulates the real estate market.
