House prices in Australia have been growing steadily now for the past 15 years, but the income of everyday Australians has not kept up.So, where exactly does the money come from to drive the price of houses? Look ma, it's not wealth, it's debt!
Figures from RP Data show the average Australian income is now between $55,000 and $60,000, but a typical house is worth around $450,000.Ouch.
With the cost of living included, this means the median dwelling price is around 6.5 times disposable income for households, more than double what is considered affordable.
"I think the most likely scenario is small house price declines, similar to what we've had in the last 12 months, so where prices are sort of probably down 3 to 5 per cent," [Macquarie Group senior economist Brian Redican] said.Spoken with authority.