THE cost of buying a home has risen by six times its price in the past 18 years, forcing first home buyers out of the market and entrenching generational income inequality.
A Senate inquiry examining housing affordability today was told by federal public servants that average house prices have outpaced income rises for almost 20 years.
Department of Social Services deputy secretary Felicity Hand told the inquiry the average cost of a home was now six times the price it was in 1986, while inflation grew just 2.5 times.
She said it was a challenge that was exacerbated in the past seven years, as rental costs had also soared compared with CPI between 2007 and 2013.
It is a situation the Australia Institute told the committee was helping keep prices up for investors to the detriment of young buyers keen to own their own home.
The institute's submission to the inquiry said the ongoing price rises were reinforcing social inequality by people being priced out of the market or forced to pay higher rents.
And, according to the TAI, baby boomers are to blame, by investing their money in investment properties and increasing inequality between themselves and their own children.
It argued the proportion of housing finance going to investors had more than doubled since 2001, with investors accounting for almost 40% of the value of home loans in January this year.
"Not only were "baby boomers" able to buy houses cheaper, relative to income, when they were younger but their investment in housing today has been a significant factor in increasing demand in the market and raising prices," the submission reads.
"The increase in house prices relative to income has resulted in a decline in younger people owning property.
"First home buyers are being squeezed out of the market with their share of home loan approvals hitting a record low of 12.3% nationally in November 2013."