House prices could rise more than 10 times faster than wages this year.

Australia’s job market has improved since the pandemic recession, with the unemployment rate dropping 0.2 percentage points to 5.5% in April, on ABS figures released last week.

Wages rose 0.6% in the March Quarter, tracking at an annual growth rate of 1.5%. But house prices are growing more than eight times that pace in the same period.

Shane Oliver, chief economist of AMP Capital, says: “House prices are up 8% already this year based on CoreLogic numbers. There’s another 2% coming in May alone. As this year settles down, we’re going to see house price growth at 15% or 20% in some cities.” The gap between average household income and house price growth has been growing for years. The average cost of housing in Australia was about 2.5 times the average household disposable income in 1990, the Reserve Bank says. Now, housing across Australia costs five times.