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Grattan: House prices growing faster than incomes

A Grattan Institute report finds house prices are growing faster than the average income.

The price of Australian property is growing faster than that of the average income, according to a new report from the Grattan Institute.

Between 1995 and 2012, Grattan says in its Renovating Housing Policy, the growth of house prices outpaced that of the average income by roughly 4.3 per cent. This supports suggestions of a housing bubble as people looking to break into the property market are unable to save up for a home.

On the other hand, as a result of negative gearing and exemptions from land and capital gains tax, Grattan says homeowners are collectively receiving £36 billion each year in subsidies.

Additionally, there is evidence that housing affordability is improving in Australia. With interest rate cuts at the Reserve Bank of Australia (RBA) bringing down the cost of mortgages while wages are on the increase, people are seeing a rise in the amount of disposable income they have.

Posted by Steve Douglas

- property, prices, income, tax, capital, gains, Grattan

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