Election 2025: Coalition’s message mixed on house prices, wages growth

Growth in residential property prices should ‘ideally’ lag behind wage gains, opposition housing spokesman Michael Sukkar has declared, but Peter Dutton has refused to endorse the claim.

Peter Dutton says he wants wages and property prices to rise, but won’t say by how much. Picture: Richard Dobson / Newswire

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Growth in residential property prices should “ideally” lag behind wage gains, opposition housing spokesman Michael Sukkar has declared, offering an aspirational target behind the Coalition’s plans to deliver greater housing affordability should it win government.

But with dwelling values surging more than 70 per cent in the past decade – more than doubling wages growth over the same period at almost 28 per cent – economists dismissed the chance Mr Sukkar’s goal would be achieved, and warned the Coalition’s policies threatened to stoke property prices further.

Peter Dutton refused to endorse the aspirational target outlined by his housing spokesman, instead claiming he preferred both wages and house prices to rise, but would not say by how much.

“Of course, we want to see wages increase,” the Opposition Leader said on Tuesday in Bacchus Marsh, on the western fringe of Melbourne.

“We want to make sure that house prices increase, because if you’re buying this house for whatever the sum is … then you don’t want that house to be worth less than that in two years’ time.”

Earlier on Tuesday morning, Mr Sukkar told ABC Radio National that he wanted “to see house prices steadily increase”.

“And ideally you’d like to see wages increase more quickly (than house prices),” he added.

Wages growth has declined in recent quarters and is lagging well behind the appreciation in dwelling values, with housing experts anticipating a further “decoupling” of the two measures in the near term.

“We have a structurally undersupplied property market,” said Maree Kilroy, a senior economist at Oxford Economics Australia. “Until that corrects in a meaningful way, we won’t see that relationship start to be re-coupled.”

Tim Lawless, executive director of research at CoreLogic Asia-Pacific, was even more sceptical of Mr Sukkar’s aspiration for housing value growth, claiming a scenario where dwelling price gains lagged wages growth was “fanciful”.

“It’d be wonderful, as that’s logically how you’d improve affordability, but that probably isn’t going to happen,” he said, arguing the Coalition’s mooted housing policies would likely add “upward pressure” to property prices.

They include making mortgage repayments tax deductible for most first-home buyers for five years and lowering the serviceability buffer on loans from 3 per cent to 2.5 per cent.

Having also faced criticism over its plans to provide all first-home buyers with a minimum 5 per cent deposit, Labor also found itself on the backfoot on Tuesday as it attempted to defend the demand-side policy.

Repeatedly asked if house prices would be affected by Labor’s changes – which Treasury estimates will double the demand for the Home Guarantee Scheme to 80,000 loans per year – Anthony Albanese refused to provide the forecasting behind the proposal.

“We don’t release Treasury documentation,” the Prime Minister said in Hobart, even though the government has done so on several occasions.

Earlier, Finance Minister Katy Gallagher asserted that Labor’s plan wouldn’t have a “significant impact” on prices, before conceding that an exact figure had not been modelled.