Why are housing prices rising faster than wages?

1 in every 7 tax payers now own a rental property. First home buyers now find themselves competing with investors utilising Australia's negative gearing laws and foreign investors attracted to the  Australian Real Estate market.
This puts the price of houses up in Australia.

Investor demand is increasing both prices and demand for housing in Australia.
Elboing people out of the way - keeping renters in the rental market treadmill as house prices rise (and rents).

Negative Gearing

Negative Gearing has been around since 1922 - it is where you are allowed to claim losses against your taxable income, thus making investing attractive. It started as a way to encourage housing development.

ABC Life matters 19-11-2014 with Peter Martin Economics Editor, The Age

"A million and a quarter Australian investors benefit from negative gearing. The tax breaks cost the government billions of dollars a year in lost revenue and critics say that negative gearing pushes up the price of houses making it even harder for first home buyers. So is it time to get rid of negative gearing or would it cause a major contraction in rental properties?"

Home Loan Sizes Growing

HOME loan sizes have jumped between 50 and 100 per cent nationally in the past 10 years.

Tip: test what you can afford at higher interest rates before accepting the lower rate - do not assume circumstances wiil not change.

7% of investments are now for new houses - leaving 93% to bid up the price of existing properties.

Invester Lending New vs Existing Construction up to 2010

Souce: http://en.wikipedia.org/wiki/File:Investor_Lending_-_new_vs_existing_to_Feb_2010.pdf

Although investors are not supposed to use a home mortgage for an investment property, it is happening anyway in Australia.

Recent information from the Reserve Bank: 50% of new loans are for investment property - this figure used to be 20%, showing increased pressures on the housing market.