Sydney property prices surged a whopping 12.4 per cent in 2014, according to the CoreLogic RP Data home value index. Treasurer Joe Hockey. Credit:Andrew Meares The market has continued its strong run into 2015, with prices up 3 per cent in March alone. The Treasurer on Tuesday agreed Sydney is an expensive city to live in but denied that housing in Sydney had become unaffordable, particularly for new entrants into the property market. "No. Look, if housing were unaffordable in Sydney, no one would be buying it," he said.

"People are purchasing housing in Sydney. It's expensive, as a multiple of average weekly earnings it is expensive, it's an expensive city to live in," he said. "But, having said that, you know a lot of people would much rather have their homes go up in value than fall in value," he said. The Treasurer said rising house prices were a good thing because they enabled owners to borrow against the equity to fund new spending. When pressed about the barriers for new entrants to the market, Mr Hockey said the solution was clear. "The starting point for a first home buyer is to get a good job that pays good money. If you've got a good job and it pays good money and you have security in relation to that job, then you can go to the bank and you can borrow money and that's readily affordable," he said.

If you've got a good job and it pays good money and you have security in relation to that job, then you can go to the bank and you can borrow money and that's readily affordable. Opposition Leader Bill Shorten said the comments could not be dismissed as another "gaffe" but proof the Treasurer is out of touch. "As if Joe Hockey hasn't insulted families enough, he's at it once more," he said. "This is 'poor people don't drive cars' all over again. This isn't just another Joe Hockey gaffe - this is proof he just doesn't get the pressure families are facing," he said. "What planet is Joe Hockey living on?" he said.

The Greens are proposing abolishing negative gearing for future investment properties, which the independent Parliamentary Budget Office has estimated would save the budget $42 billion over the decade. Mr Hockey said such a move would see rents increase while Labor has sounded caution about the idea, warning it could hurt "mum and dad" investors, and not just the big end of town. The Treasurer said increasing supply was the key to resolving housing affordability as it was a basic "supply and demand" issue. Building approvals are set to reach 200,000 in 2015 - the highest on record. On the weekend, Bank of America Merrill Lynch economist Saul Eslake warned rising house prices are causing "social harm". He said it was fuelling an increase in the gap between those who own property and those attempting to enter the market and said unlike in the last housing boom, was no longer seeing owners borrow against their equity. The government has directly contradicted the Treasury secretary John Fraser and the Reserve Bank who have described the rising house prices as a property bubble. Assistant Treasurer Josh Frydenberg said on the weekend "there is no property bubble".

In question time last week Prime Minister Tony Abbott responded to a question raising concerns about a housing bubble, saying he welcomed rising house prices in Sydney. "As someone who, along with the bank, owns a house in Sydney I do hope our housing prices are increasing," Mr Abbott said. Loading He also attacked the Labor Party over the line of questioning, saying Labor "wants your house to be worth less". Follow Latika Bourke on Facebook