Home News Wage growth slows as Sydney house prices jump

Wage growth slows as Sydney house prices jump

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New CoreLogic data has revealed that house values in Australia's biggest city have jumped more than five times faster than wages in each of the past two years.

Bloomberg found (upon collecting information from CoreLogic) that wages in New South Wales went up 2.5% in 2013 and 2.4% in 2014, “compared to gains of 12.4% and 14.5% respectively for homes in Sydney. Sixty per cent of NSW’s population resides in Sydney.
 
However, the data also showed Sydney house and apartment prices have jumped 40% from May 2012. The report said this forced regulators to call on banks to strengthen lending standards and warn of the potential for values to drop.
 
The rise in property values comes as income growth among households “slows to the lowest on record, rental yields approach an all-time low in Sydney and Moody's Investors Service said housing affordability in the city has deteriorated”.
 
"When you compare home-price surges between early 2000s and now, this time income is static or lower in real terms," said Martin North, a Sydney-based principal at research agency Digital Finance Analytics, as quoted by The Australian Financial Review.
 
"With interest rates at rock bottom, the affordability is not extreme, but it can easily go very bad if rates normalise and add to that static or declining rents."
 
Meanwhile, Moody’s latest report released this week said Sydney households spent an average 35.1%of their income on mortgage repayments, up from 32.8% in 2014.
 
 

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