Don’t count on a wage increase putting that Sydney home within reach. Home prices in Australia’s biggest city have surged more than five times faster than wages in each of the past two years, adding to fears of a housing bubble.
Wages in New South Wales state, where 60 percent of the population resides in Sydney, climbed 2.5 percent in 2013 and 2.4 percent in 2014, compared to gains of 12.4 percent and 14.5 percent respectively for homes in the nation’s most populous city and financial hub, according to government and CoreLogic Inc. data compiled by Bloomberg.
Sydney house and apartment prices have soared 40 percent from their May 2012 trough to a record, forcing regulators to call on banks to strengthen lending standards and warn of the potential for values to drop. That comes as wages growth slows to the lowest on record, rental yields approach an all-time low in Sydney and Moody’s Investors Service saying housing affordability in the city has deteriorated.