Australian house prices are “severely unaffordable,” and could remain that way for at least 10 years, AMP (ASX:AMP) has warned.
Houses across Australia, including capital cities and major non-capital cities, are unaffordable based on the disparity between income and prices, AMP said.
And prices would need to remain flat for at least 10 years as income growth continues before prices would fall back to affordable.
AMP on Thursday published the results of a study into house prices, conducted with the National Centre for Social and Economic Modelling (NATSEM).
The report finds that house prices have soared 147% between 2001 and 2011, but after-tax incomes only grew 50%.
The median house price is now $417,000, and only 4% of suburbs in Australia's major capitals can be classed as affordable, AMP said.
Prices vary by city, but are most expensive in Sydney, where the typical home costs over $500,000 – 8.4 times the average household income.
But in four states and territories, price rises in large regional areas have been outpacing capital cities.
“It’s no longer just capital cities that are facing affordability issues. Affordability levels in Wollongong, Newcastle, Mandurah and the Gold and Sunshine Coast are now on par with major capital cities,” said Ben Phillips, NATSEM's principal research fellow and the report's lead author.
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