Misguided government policy is being blamed for Sydney's soaring house prices which are now rated as the highest in the world.
The Australian Institute of Public Affairs (IPA) has used data from the US to, finding the average Sydney home costs over eight times the average household income.
With prices in the US and Britain falling on the back of the sub-prime mortgage crisis, homes in Melbourne, Perth and Brisbane are creeping up the scale too.
The institute's director Dr Alan Moran says land availability, high government taxes "masquerading as development levies" and bureaucratic red tape are behind the soaring prices, warning action is needed to bring them down.
"These measures are preventing all but the most affluent young buyers from getting a toehold in the housing market," he said.
"It is clear that regulatory restrictions are fuelling the high cost of building new homes."
He said areas like California and Britain had seen recent price collapses and were seeing fewer and fewer new homes built.
"By contrast, (US) cities with few regulatory restrictions - such as Atlanta, Houston and Dallas - have seen stable prices in the housing market," Dr Moran said.
