Time for another reprint of one of my Australia and New Zealand magazine articles, this one is on the highly contentious issue of house prices, both here and in the UK.
Which country’s houses really are the cheapest? Or, more to the point, the most expensive?
Before we push on with the article I want to show you a photograph of the first house that me and Mrs Bob bought together in England back in 1997…
Yes, that’s it!
To help you get to grips with this, you will have noticed I’ve drawn two red vertical lines, everything between those lines was our house, everything outside of those two lines belonged to the neighbours.
The house would have been less than 6 metres wide and that is not unusual in the UK. Here are some more…
The house Price debate
If you were to Google information about Australian house prices, you’d see headlines like “Australia’s house prices the second-highest in world”, “Home affordability from bad to worse” and “Are foreigners to blame for high house prices?”
I don’t know the full answer to that third question, but it wasn’t me.
Now if you were to Google information about house prices in the UK you’d see more alarming headlines, such as “House prices rise to ten times average salary”,” “House Prices Are Unaffordable” and “House prices: why are they so high?”
Scary stuff whether you want to buy a house in Australia or the UK, but which of our countries’ houses really are the most expensive? That, as it turns out, is not an easy question to answer. Before we can truly compare prices, there are a few things we need to sort out.
First, are we going to look at average prices or median prices? I chose averages once and felt the wrath of a number of statisticians doing the shaky fist dance, they seem to prefer median for some reason. My science teacher (or was it maths?) felt it was okay as long as you compared like for like. But that’s also quite impossible thanks to regional variations.
I can buy a house in Blackpool for around £150,000, but if I’m looking in London, the UK’s most expensive region, the average is just over £500,000.
Sydney is our most expensive city with current average prices across all dwelling types at around $730,000. But can you compare Sydney with London?
The average price of a home in Ipswich is $290,000. That’s not the one in East Anglia, but the city just 20 kilometres or so from my house and 40 clicks from Brisbane. But can I compare Australia’s Ipswich with the UK’s Blackpool?
Then we have to take into account the currency exchange rate between the GBP and the AUD. On top of all that, as I’ve suggested here in a previous article, Australian wages appear to be substantially higher than those in the UK by something like 31%.
Can you see how difficult it is to compare like for like?
The one big massive variable though will be discovered if you search online for “biggest houses in the world”. If you do that you will discover that Australian homes are officially the largest on the planet. We are still talking averages, but floor space in a newly built house here is 214 m² compared with a measly 76 m² in the UK. We get 89 m² of floor space per person down under compared with just 33 m² for those of you in the UK.
So our houses are almost 3 times bigger than in the UK. If you were looking to buy a new house in the UK that was 3 times bigger than the one you currently live in, would you expect to pay a bit more?
How much more?
I don’t mind telling you I could not possibly afford the house I have here in Australia if it were in the UK. So now let’s ask that question again. Considering everything, which of our countries’ houses are the most expensive?
It’s still not an easy question to answer, but I know where my vote goes.
That’s where my article ended for the magazine, bit of a cliffhanger eh? Where exactly does my vote go?
Well the magazine had two pictures included in the article and here they are. They act as a big clue. This is a picture of the second home that me and Mrs Bob bought in the UK, which would have been towards the end of 2001…
And this is the house we purchased when we first moved to Australia in November 2007, and we are still in it after more than seven years. At the time, it cost much less than the house we sold in the UK, about two thirds of the price to be precise, than the one in the picture just above. Here it is…
I should further clarify here though, in the interests of full disclosure, that my UK home was in the south-east of England in a small town with a direct train line into London. So prices were higher than average, but certainly not anywhere near as high as London prices.
I now live in a suburb of Brisbane about 22 km from the city where house prices are slightly more reasonable and a little bigger than if I were to live closer to the CBD. Brisbane prices are also a fair bit lower than Sydney, Melbourne and Perth.
Taking all that into account, I’m sure you can see how difficult it really use to compare house prices, there simply is no ‘like-for-like’. But it’s great fun having the debate.