Continuing Low and Flat Wages to Impede Home Price Growth

Wage growth remains at record low levels with no sign of a revival despite the strong recent labour market rebound.

The ABS reports that the national Wage Index increased by just 1.4% over the December quarter of 2020 compared to the same period in 2019.

The December quarter annual wages growth rate remains the lowest on record following the same result reported in the previous September quarter.

The latest annual growth rate is sharply below the 2.2% recorded over the December quarter of 2019.

Victoria again recorded the lowest annual increase in private sector wages at 1.1% with WA the highest at 1.6% followed by NSW 1.4%, SA 1.3% and QLD 1.2%.

Low and subdued wages growth is likely to continue for the foreseeable future and although the jobless rate continues to fall, it remains well above the levels required to deliver the competition for labour by employers that will push up wages.

The subdued outlook for wages will place a floor on price growth in currently strong housing markets and also act to constrain consumer spending particularly as coronavirus income support measures to wind down.

About Dr. Andrew Wilson Dr Andrew Wilson, Chief Economist of www.MyHousingMarket.com.au is widely regarded as Australia’s leading property economist.