The law of demand suggests that price and demand for a product are inversely related, i.e., a rise in price will cause demand to fall and vice-versa. Consider the recent boom in the Sydney hosing market, where the demand for homes continues to remain strong amidst elevated prices.

Why is the law of demand not operational in the Sydney housing market? Explain your answer.

The Reserve Bank of Australia continues to hold cash rates at the lowest levels. Mortgage rates influence individual decisions to purchase a property. Are mortgage products a complimentary product for the housing sector? Why or why not? Explain.