Australian homeowners are watching their property wealth surge while wage earners struggle to keep up, according to startling new data that highlights the nation's growing wealth divide.
CoreLogic analysis reveals property values have dramatically outpaced wage growth in three major capital cities over the past year, creating what experts are calling an "unprecedented affordability crisis" for aspiring home buyers.
The Cities Where Property Wins the Race
Perth has emerged as the standout performer, with property values skyrocketing 22.1% in the 12 months to April 2024. This growth completely dwarfs the city's wage increase of just 4.7%, creating a wealth gap that's becoming increasingly difficult to bridge for those trying to enter the market.
Brisbane followed closely behind with property values climbing 15.8% against wage growth of 4.2%, while Adelaide recorded 13.5% property growth compared to 4.3% wage increases.
The National Picture
Across Australia's combined capital cities, the trend remains clear: property is winning the wealth race. Values rose by 9.1% overall, significantly outpacing the national wage growth index of 4.3%.
Even in cities with more modest property growth, the gap persists. Sydney recorded 7.7% property growth against 4.1% wage increases, while Melbourne saw 2.8% property growth compared to 3.9% wage growth.
What This Means for Aspiring Homeowners
The widening gap between property values and wages creates multiple challenges:
- Larger deposits required: As prices rise faster than savings can accumulate
- Increased mortgage stress: Higher purchase prices mean larger loans
- Longer saving periods: Pushing home ownership further out of reach
- Intergenerational wealth divide: Creating a gap between property owners and renters
CoreLogic research director Tim Lawless noted that while wages are growing at above-average rates, they're simply not keeping pace with property value increases in most markets.
The Rental Market Squeeze
The affordability crisis extends beyond purchasing, with rental markets experiencing similar pressures. Perth led rental growth with a massive 9.1% increase, while Brisbane and Adelaide saw rises of 8.8% and 8.4% respectively.
This double-whammy of rising purchase prices and rental costs is putting unprecedented pressure on household budgets across the nation.
The data paints a clear picture: in today's Australian property market, owning real estate is proving to be a far more effective wealth builder than relying on wage growth alone.
