The average home loan has grown almost four times faster than the average Australian full-time wage, new research has revealed.
According to data from the Australian Bureau of Statistics, the average home loan grew by 18.5% in the two years to April 2015 – from $301,800 to $357,500. During the same time, however, the average Australian full time wage grew just 3.6% from $77,225 to $80,054.
Speaking about the data, Mortgage Choice
chief executive officer John Flavell says the statistics are “worrying”.
“Data from the Australian Bureau of Statistics shows the current average loan size in Australia is approximately 4.5 times larger than the average wage. By comparison, in 2013 the average loan size was just 3.9 times the average full-time Australian wage,” he said.
“These statistics would suggest that property prices are rising at a much faster rate than Australian wages and this is unlikely to change anytime soon.
“Housing affordability is already a significant problem in many parts of Australia and data would suggest that the problem will only get worse unless something is done.”
The latest statistics released by CoreLogic
RP Data found property values climbed by 2.8% and 2.9% in Sydney and Melbourne respectively over the month of June alone. Over the last 12 months, Sydney values have soared by 16.2%, while Melbourne values have risen by 10.2%.
While the government is actively talking about housing affordability in many public forums, including last month’s Inquiry into Home Ownership, Flavell says they are not doing a lot else.
“At the Inquiry into Home Ownership last month, Treasury’s acting deputy secretary Macroeconomic Group, Jenny Wilkinson, said demand for housing continues to outstrip supply in many markets across Australia and more needs to be done to address the issue,” he said.
“Sadly, how the problem can be addressed was not discussed. Witnesses in the public hearing were exclusively employees of Government departments, consumer voices were not heard and their opinions were not sought.
“This suggests these inquiries are designed to allow a lot of political grandstanding and not a lot of action. This feels very much like the Government commissioned inquiry into home ownership, conducted in 2004 and lead by the Productivity Commission, which produced 255 pages of findings with no practical outcomes or actions.”
According to Flavell, the only thing that has changed since 2004, is that the rate of home ownership has continued to decline and the proportion of households with a mortgage has increased. Further, people are increasingly being driven into unaffordable rental properties, while the proportion of people living in public housing has declined.
Flavell says the time for political grandstanding has got to come to an end and it is now time to act, which is why he has announced Mortgage Choice’s investigation into housing affordability. He is now urging consumers to take part in a survey to have their say in how housing affordability is affecting them.
“I strongly encourage everyone with an opinion to take part by having their say. The more we know and the more data we have, the better placed we will be to help the decision makers in Australia tackle the important issues first,” he said.