Property values rise faster than wages and homeowners are asset-rich

Domain has released new data which shows that property prices are outpacing annual wage growth in the third suburb.

According to the report, 95% of Australian suburbs experienced an increase in their house prices over the past year. These suburbs saw 33% of the gains reported higher than the annual household income.

Domain senior researcher analyst Dr. Nicola Powell said that the phenomenon has made homeowners wealthier because their assets have increased value.

Dr Powell stated, “it is this wealth effect that has underpinned the stronger than anticipated economic recovery prior to the current Delta outbreak.”

New South Wales had 55% of the suburbs where property prices outpaced wages.

18 out of the 20 national suburban areas where income grew faster that price increases were also managed by the state.

Dr Powell stated that the top 20 suburbs are representative of the demand for homes in cities as well as on the lifestyle coast.

“This is evident in the flow of residents from our capitals and into regional lifestyle locations, as well as keyword searches placing importance on particular home amenities or luxury additions that boost our lifestyles and how we use our homes — such as a pool and study.”

Taking the top spot was Sydney’s exclusive Dover Heights. The area’s median property value increased by $1.27m over the course of the year.

This was seven times more than the $174 491 household income.

Dover Heights is one of only 13 suburbs in which prices have increased five-fold over the annual household earnings.

However, units were a different story. The price gains for units were not as dramatic as the ones for houses.

In reality, only 10% of 67% suburbs saw unit prices rise above the annual household earnings.

Dr Powell explained that this was due to the fact national house prices increasing almost three times faster that units over the past year.

Queensland had the highest proportion of suburbs with unit gains higher than household income, at 13%.

New South Wales was the dominant state among the top 20 suburbs that have units. Milsons Point took the top spot.

Over the past year, the median Milsons Point unit value has increased by $508,500. This is almost three times the annual household income of $178,867.