Australian property prices are creeping higher as wages fall behind

A NEW report has revealed just how low wages are across Australia, crippling property buyers and their ability to afford a home in several states.

Sophie ElsworthPersonal finance writer

less than 2 min read

March 30, 2017 - 2:48PM

News Corp Australia Network

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MANY property buyers are feeling the strain of purchasing a home as prices continue to climb at a much faster pace in many cities than incomes.

New figures released today in Deloitte’s 12th annual Australian Mortgage Report found house prices in capital cities including Sydney, Melbourne and Canberra are creeping up more quickly than income growth.

In Sydney the house price to income ratio is 8.4 times higher, climbing from 7 times in 2011.

While in Melbourne the house price to income ratio is 7.1 times higher, up from 6.9 in 2011.

Canberra’s ratio has climbed from 4.8 to 5.2 in this same period, while in all other capital it has taken a backwards turn.

Wages are falling behind the surging cost of house prices. Picture: istock

The report has found in the 12 months to December 2016 the mortgage market is flat — total new lending nationally including refinancing home loans was $384 billion which was the same as the 12 months to December 2015.

This is the first year since 2012 that settlements have failed to climb over the previous annual period.

The banking regulator, the Australian Prudential and Regulation Authority enforced a lending benchmark of 10 per cent new annual growth to investors during 2015 and the first half of 2016, which saw make multiple out-of-cycle interest rate hikes.

The report said there was a return to stronger investor lending in the second half of 2016.

Already this month investors have been hit much harder than owner occupiers with out-of-cycle interest rate hikes.