UK and Australia: The House Price Debate

Anz MAR 2015Time 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…

Our frirst UK houseI think my Australian readers will be fascinated by this image, so much so, that I need to explain something to them.

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…

HousesNow on with the article, which appeared in the March edition, and was called…

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…

UK homeAnd 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…

AUS homeI 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.

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{ 15 comments… add one }
  • djmcbell June 29, 2015, 5:34 pm |

    I actually found a house this weekend that’s just like my current one, round the corner, identical in every way (that’s something else about UK homes, for those unaware – you can get estates and estates of the same house).

    So I surmised that mine must be the same size, which is – about 42 square metres per floor, so 84 square metres in total! Of course, then you’ve got to take out the stairs, which is an area that can’t be used for anything much, other than going up and down them.

    I then looked at the measurements of various Aussie homes and got severely jealous. I hate you all.

    • BobinOz June 29, 2015, 8:47 pm |

      Crikey, my garage is over 60 square metres. Now I bet you hate me even more 🙂

  • Terry Baccus June 8, 2015, 10:11 am |

    Well I’m going to wade into this with my 2 cents (1pence) worth.
    I bloke I worked with recently (May 2015) was showing me his new property he and his partner were buying.
    I looked at the plans and saw a media room (thought that was for news reporters) as standard,
    What surprised me was the size of his lounge/dinning room. I realised that the entire foot print of the main part of house (3 bed, bathroom and landing) could fit into that area!
    It’s a complicated argument which has the most expensive as you can factor in what you want to get the result you are looking for. I’m a simple person, so I keep it simple, if I can afford a house where it’s bigger and nicer with good weather and prospects I’ll buy it. Mostly the house you buy is the one you can afford in either country.

    • BobinOz June 8, 2015, 8:53 pm |

      Yes, modern Australian houses very much like the open plan approach and the family room as it is called is almost always the biggest room in the house. Often the kitchen and dining areas can form part of this large, sorry, very large room.

      The media room is therefore often a place to escape from that open plan living area, shut the door, put on the telly and blast a movie into your face via your 55 inch plus flatscreen television.

      It’s how many Australian households roll 🙂

  • Charlotte May 25, 2015, 10:37 pm |

    Hi Bob!
    Me and my partner are looking to make the move in a few years, our ideal place to live is Brisbane. What’s the best suburb to live, and also for house prices? We’re looking to rent first with the possibility of buying if we decide to stay permanently 🙂

    • BobinOz May 26, 2015, 6:27 pm |

      Hi Charlotte

      Have a look at my main page about Brisbane and in particular the comments, you will learn a lot about many suburbs. It should help you narrow down to something depending on what you like and don’t like, and then to help you further you can also do some extra research on my page called Which Suburb?.

      Happy househunting, Bob

  • James May 25, 2015, 6:38 pm |

    Very interesting and a question I get asked all the time. We moved from the UK (Lincolnshire) in 2009 and spend our time 50/50 between here in Melbourne and back in Lincs. We made the mistake of comparing house prices in the Melbourne area (Bayside and the Mornington Peninsula) with those back in our area of the UK. Of course we were shocked! but then again we should be comparing Melbourne prices with those in London.

    We made the mistake too of converting every price here back into pounds and, again, that’s not really relevant as some things are less and some are more and the exchange rate fluctuates. As our son suggests – “don’t compare prices just pay them! or suck it up as they say”

    Anyway I’m in real estate here and a % of a high house price is better than a % of a small house price AND houses sell quite easily here (but hard to get sellers).

    We now have our Australian citizenship and passports so fully flexible about where we can be at any time of the year – we try to miss all winters. The PR and citizenship process is a challenge but it can be done – we’re in our early 60s so if we can do it so can most of your readers

    G’day Bob

    • BobinOz May 25, 2015, 9:44 pm |

      At the end of the day your son’s advice is probably very sound 🙂

      As you have noted and I’ve pointed out in my post, comparisons are really difficult. And as for simply converting the money, the exchange rate has nothing to do with the cost of a house in Australia, what does matter the most is how much people earn when working here in Australia in Australian dollars.

      Thanks James, Bob

  • Ronny May 22, 2015, 5:51 am |

    Very interesting Bob, as usual.
    I ve been told the time needed to buy your house is something comparable : for example in France the mean wage is 21k€ per annum, 33% of this amount is dedicated to mortgage or loan. Source Insee.
    The average price of an accommodation is 220k€ (Source la tribune) that is roughly 31 years to buy a house. You can see where the mean and median values can vary. And obviously each household (particularly if they intend to move abroad) has a different point of view
    Can you find out those figurs for both uk and oz?

    • BobinOz May 22, 2015, 9:21 pm |

      Yes, I’m a big believer in ‘how long it takes to pay for something’, I call it the hard yakka.

      I also did this kind of thing, albeit in my own clumsy way, when I compared house prices in a very old post and tried to work out how many years it would take to pay for those houses in each country, assuming (if I remember rightly) that you paid no tax on your earnings and you put everything towards paying off the house with no interest.

      You can read it here…

      It’s an interesting comparison, definitely worth a look.

  • djmcbell May 21, 2015, 9:54 pm |

    Ah, house prices. Everyone has an opinion and a story, and here’s mine.

    Bob – my current house (in the UK, about 15 minutes walk from a large city centre) is about the same size as the first one in the article. Yep, the one with the red lines. It’s a through-terrace, meaning it has a front and back garden, but to either side is another house. It’s actually reasonably spacious inside (three double bedrooms, a bathroom, small downstairs toilet, small kitchen, hallway, lounge and dining room), but noticeably smaller than the average Australian house. We bought it about seven years ago, privately, for a bit of a bargain, but in the intervening years the price of homes in the area has gone down, probably due to all sorts of factors (economy and rising crime in the area, probably – someone was shot about 15 metres from our front door a few years back).

    Needless to say, when we sell (if we manage to get to Australia, which we’re slowly working our way towards), I’d imagine it’ll sell for a bit less than we paid for it. But considering we’ve been good with paying our mortgage etc, we should come out with a bit more than we owe on our mortgage.

    We did consider renting it out, and it’d rent out for a few hundred per month than we get for our mortgage, but we’d have to pay the rental company a bit, still pay the mortgage, and then pay any insurance and so on. At the end of the day it probably wouldn’t have been worth it, though it is still on my mind. But you do get some tenants nowadays who leave everything in a right state.

    As for Australia… we’ve already decided on that! A 4-bedroom new build, preferably with a double garage, a big open-plan living area and a spare media room. Looking at some websites (such as Dixon Homes), to build such a thing would cost in the region of $175k AU. Which is pretty good, though you do still need to buy the land (so probably add another $100k AU on top of that). But there are the discounts you can get as a first-time home builder ($10k AU I think).

    But, looking at $275k AU, that comes to (thanks XE) £138k (ish). This is obviously building in a particular location (near my parents, but there is a small city near them and a much bigger one a bit further away, but all within commutable distance).

    Yeah, I look at some builders websites sometimes (again, particularly Dixon Homes – they list prices! Though Simonds has a special on at the moment, but I haven’t signed up for it). It’s a guilty pleasure…

    • BobinOz May 22, 2015, 8:59 pm |

      Now if somebody were to be shot 15 metres from my house, they’d still be in my house, well somewhere in the garden; in your case I guess they were three houses away 🙂

      Yes, it’s true, you can get a house built here for around $175k, but I’m not sure where you can buy land for $100k, you might want to double check on that. I’m not a builder, but I do know a bit about it and you need to be aware that sometimes there are additional payments that can throw your sums right out.

      Firstly, you can buy land that is ready to go, that means all the council fees have been paid, including contributions to infrastructure, plumbing and sewerage is in place, as are all services like telephony and electricity, everything’s been laid underground, you just get a builder to build your home and connect it all up.

      Even when you buy that kind of land, you still have to pay additional money to landscape it, put a fence around it, maybe add a patio area and outdoor roofing set up, that kind of thing.

      Then there’s land that hasn’t got any of those services already connected and you will pay thousands and thousands of dollars, possibly more than $100,000 setting all up.

      Just make sure you are aware of all of the costs you will be in for before you sign anything.

      • djmcbell May 22, 2015, 9:33 pm |

        Good points Bob and good advice. I guess there’s only so much looking we can do from here…

  • Sergey Ratakhin May 21, 2015, 11:48 am |

    Most cities in the US have much lower house prices and higher incomes though. It’s a more valid comparison.

    • BobinOz May 21, 2015, 6:56 pm |

      It’s not more valid at all, not when I’m specifically comparing prices between the UK and Australia. I hear prices in Detroit are quite low 🙂

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