UK and Australian House Prices Compared; Cities and Regions 2016

It’s been quite some time since I last took a good look at house price comparisons between these two countries, maybe too long. So let’s put that right today.

FreeImages.com/Jorn Jansen

The problem with these comparisons though is, where do you get your information from? The last time I looked at Australian prices in my post called Australian House Prices: Capital Markets Report 2013, the information came from RP Data. But building societies, governments, institutions and organisations all report on house prices and come up with differing figures.

Then there are averages, means, medians, weighted averages, mix-adjusted and seasonally adjusted figures. Throw in the ever-changing currency exchange rates and different average earnings for each country, and the task is almost impossible.

But today though we will try and look at the variation in prices between our two countries and the cities and the regions of each.

House prices in the United Kingdom

We will start with the UK. I recently came across a headline saying prices of houses in the south of England were almost double that of houses in the north.

The following figures were produced by Nationwide and released at the beginning of this month, so are valid as at the end of Quarter 1 of 2016. They are described as average prices over the last 12 months:

As you can see, prices vary enormously across the UK and from nation to nation. Here is a smaller chart of the current average house prices for each of the four nations that make up the UK:

Source: Nationwide. Clicking on the following link will open their full PDF report.

The Office of National Statistics (ONS) see it differently; these are the figures they had in February 2016, which they describe as a ‘mix-adjusted average house price’:

Source: ONS.gov.uk

As you can see, even though both the ONS and Nationwide are using averages, the ONS prices are considerably higher. Now let’s turn our attention to Australia.

House prices in Australia

Just as in the UK, Australia’s house prices vary considerably from city to city and region to region. The following figures were produced by the Real Estate Institute of Australia (REIA). They describe them as the ‘weighted average median house price for eight capital cities at December 2015 quarter.’

The percentage price fluctuations are for the December 2015 quarter:

• Sydney down 2.5% to $1,025,478
• Melbourne down 0.1% to $718,000
• Darwin up 0.5% to $608,750
• Canberra up 3.7% to $593,000
• Perth up 0.4% to $535,000
• Brisbane up 3.2% to $490,000
• Adelaide steady at $430,000
• Hobart up 9.8% to $392,000

• Australian median house price $695,788 (down 0.4%)

As you can see, again prices vary massively across the country. Additionally, all of these prices are for our capital cities, we still have plenty more houses in rural and regional Australia. This information is harder to find, but I did do a search for all houses in Australia costing $250,000 or less with a minimum of three bedrooms, state-by-state.

Here’s how many houses were available today:

• New South Wales – 3,765
• Victoria – 4,385
• Queensland – 6,547
• Western Australia – 1,528
• South Australia – 3,181
• Tasmania – 1,736
• ACT – 5
• Northern Territory – 30

I didn’t check every house to make sure that they all fit with the criteria, but as you can see, there seems to be plenty of three-bedroom houses to choose from that cost less than the equivalent price of some of the cheapest houses in the UK. Remember, these are houses, not flats, apartments or units.

A note on averages and medians

Some dedicated statisticians among you may suggest that all of this information is useless as the UK talk about averages and Australia medians. I wholeheartedly disagree, I think when there is this much data, as in thousands of houses, the difference between the two is diminished.

These are the only figures I could find to work with though, so there was no other choice.

Conclusion

The only conclusion that can truly be made here is that house price comparisons between the UK and Australia are difficult to say the least. Seems to me though that:

• People say, and quite rightly too, that houses in Sydney are ridiculously expensive. But when you compare just over $1 million with London prices of anywhere between £455,000 and £524,000, depending who you believe, then there’s really not much in it.
• If you add up all of the above average prices for the eight Australian capital cities and then divide by 8, you will get an average price of $599,028, not the $695,788 quoted. But Sydney and Melbourne are our two biggest cities and therefore have more houses and they are also far away our most expensive cities. They are our equivalent of London and the South East in the UK; all should be avoided if you are looking for lower housing costs.
• If you take into account that Australian houses are significantly bigger than those in the UK, then maybe the additional cost you might end up paying for a house here in Australia will be worth it.
• If you move from one of the regions in the UK where property prices are low, for example Scotland, Northern Ireland, Wales or the north of England and hoping to move to Sydney, you might find it quite tough. If, on the other hand, you decide to move to one of our large regional cities or even a smaller rural town, you could well be better off.
• If, like me, you move from England’s South East, the most expensive region outside of London and Outer London, and then move to Brisbane, Australia’s third least expensive city, then you will almost certainly get a much bigger house for the same money or less.

So the real conclusions about house prices can only be made by you, according to your circumstances, where you’re coming from and where you are going to.