The Cost of Living in Australia: House Prices

Required for reading this post: maths level 2 or above.

I have written about house prices before, but then the other day I saw an interesting article on Yahoo news which I wanted to copy and paste onto my blog and claim as my own. Two things prevented me from doing this.

  1. Firstly, apparently it is illegal.
  2. Secondly, it was too professionally written for this blog.

So instead, I need to mash it up and tell it to you in my own words. So here goes.

A House

It gets murky

The article asked “Is the Australian dream dead?” in reference to owning your own home. It discusses the cost of housing and looks at the affordability of it for existing homeowners and for the first time buyer getting onto the housing ladder here in Australia.

Now I can only talk about my experiences in my previous country, England, so I don’t know how this might compare with where you live. But the article was trying to make the point that it is now ridiculously hard for single income buyers. Let’s take a look.

Firstly, existing homeowners.

These were the median house prices across Australia’s five biggest cities rounded to the nearest grand as at 2009……

  • Sydney:       $577,000
  • Melbourne:    $492,000
  • Perth:          $475,000
  • Brisbane:      $452,000
  • Adelaide:      $379,000

Average annual earnings across the same five cities ranged from $65,000 a year in Perth down to $54,000 a year in Adelaide. The mortgage repayments appear to have been calculated at a cost of around $6.40 per $1000, 5.90%. As a 10% deposit had been assumed, the mortgage repayments ranged between $3,317 (Sydney) and $2,180 (Adelaide) per month.

They then talked about “Average total earnings needed to avoid mortgage stress.” According to their sources for this, mortgage stress is assumed to take place when your mortgage repayment exceeds 35% of your income. From here they could simply calculate how much you needed to earn a year to avoid that stress and therefore how many people would need to work (based on average annual salaries) to cover that mortgage.

The bottom line was that you would need 1.4 times one person’s salary to live in Perth or Adelaide, 1.5 for Brisbane, 1.7 for Melbourne and 1.8 times one person’s income to live in Sydney.

Let’s translate that to English. And England. Take the average weekly income. According to government statistics for 2008, men earn around £28,000 a year and women earn around £22,000. That’s nice and easy, so £50,000 between the two of them.

Using the same criteria, which is we do not want them to be paying more than 35% of their income on a mortgage and they have to put in 10% deposit, I calculate (at 5.90% interest, 25 year mortgage) they can afford to buy a house worth £250,947.

Now I may be a little out of touch, but I don’t think you’d buy much of a property in any of the equivalent places in England for that. But this is where it gets kind of murky. What is equivalent to these 5 top Australian glorious golden sandy beached seaside cities? Is it London, Birmingham, Leeds, Glasgow and Sheffield? They are the most populated. Or is it London, Oxford, St Albans, Brighton and Bath. They are probably the most expensive.

If you could buy a house in any of those places for £250,947, it probably wouldn’t be a four bed detached with double garage, as many of these are, with the possible exception of Sydney. Note also that to buy that house for £250,947 I have automatically assumed that two people will be paying for it. Not 1.4, not 1.5, not even 1.7 or 1.8 people, but a whole 2.0 people.

But what about first time buyers?

For first-time buyers it was assumed they would try to purchase their first property outside of the major cities. Here were the median prices for each of the five main states which seem to assume that nobody wants to live in Northern Territory or Tasmania.

  • New South Wales:   $331,000
  • Western Australia:   $330,000
  • Queensland:           $320,000
  • Victoria:                $291,000
  • South Australia:      $279,000

To avoid mortgage stress as defined above, all the above states required exactly 1.0 people’s incomes to pay off the mortgage apart from Queensland which required 1.1.

If I am not mistaken, for a first time buyer to purchase a property in England on their own AND avoid mortgage stress you would need to win big time on the lottery.

So I would suggest that if the Australian dream is dead, the English dream was buried years ago. Those Aussies, they don’t know when they’ve got it so good!

Confused? Me too. So here’s a conclusion: On the basis that first time buyers can still get on the property ladder here whilst earning “average” incomes; On the basis that whatever you do buy here is much bigger than the usual UK abode; On the basis that housing here up north (Northern territory was not looked at in those figures) is much cheaper here, just like in the UK; I still say…..

….for house prices, UK vs Australia, it’s got to be another victory for Oz.

A Yahoo article did have a more professional and thorough explanation of what you have seen here, but they have now taken it down. So this is all you’ve got! Apart from…..


I have revised my comparison to take into account property price fluctuations and the GBP v AUD exchange rates. You can read the new post by visiting…..

The Cost of Living in Australia: House Prices Revised

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{ 99 comments… add one }
  • jacob May 24, 2017, 10:31 am |

    HI, im doing inflation for a school assignment. can you please answer the following questions.

    1) Do you live in NSW yes/ no
    2) Do you own a house yes/no
    3) How was the price range for your house was high or low? high/low
    4) Do you think it is getting harder for a young person to buy a house? Yes/no
    5) Why? _____________________
    6) How many acres to you live on? ______________
    7) Do you think the rental market is inproveing yes/no
    8) Why? _____________________
    9) What would you do to improve NSW renal market?
    10) Why?

    • BobinOz May 25, 2017, 7:39 pm |

      I can’t help with this one, I live in Queensland.

  • Peter August 27, 2015, 6:26 am |

    Hi bob, I’m Peter here from Malaysia, thought of moving to Oz next year, which place would suggest me if my annual salary around 40k annually

    • BobinOz August 28, 2015, 8:25 am |

      I don’t really get the question, but 40k isn’t much, so a city that isn’t so expensive would be good, maybe Adelaide.

  • John thatcher December 24, 2014, 6:29 am |

    About 10+ years ago I listened to a radio 4 program on global warming.
    One of the people speaking commented that with in 20 years people would start to leave Australia because the climate would become too hot .At the time I didn’t take much notice about this comment however I have now met my 2nd person who has left Australia for this reason just recently.Also one of my friends has just commented in a letter received today that Adilade has just had its hottest year on record .
    If this is true the over priced property in Australia may be about to start a slide in prices at increasing speeds.
    Australia in my opinion is heading for disaster for many reasons the present over value of property been one.
    Bob May i wish you
    All the best for Christmas and the new year

    • BobinOz December 29, 2014, 6:18 pm |

      Just a few weeks ago I was reading about some very important people who believe that the earth is likely to be struck by a meteorite at some point in the future. If that does happen I would suspect that where ever that meteorite might land would very much affect property prices in the immediate vicinity quite dramatically.

      It’s all a worry, isn’t it?

      Season’s best to you as well, cheers, Bob

      • John December 30, 2014, 7:32 am |

        That is a very good point.
        That combined with possible nuclear war , plagues , stagnant volcano,s the list goes on.
        I wasn’t joking about the heat and what I have noticed.
        But we can only wait and see where the future lies hopefully I am wrong and it all amounts to nothing.
        Australia and its massive over pricing is all over the Internet your Big Mac / Mars bar style comparison is used regularly to show inflation ect .However they say if you ask 100 economist for a projection of the future you will get a 100 different replies.
        My guess is that whilst we both argue left right and forward re what is right and wrong we will all be bitten on the arse by something non of us saw coming.
        Wishing you all the best for the new year.

  • John Thatcher November 30, 2014, 12:38 am |

    Australia is the same as much of the western world.The I’m all right jack older generations have stollen the future of the younger generations and quite possibly the country as well with there greed.
    Any culture that does not look after its young people is heading for a BIG FALL!
    If the young have to run just to keep up the number of childless/ small families increases.Australia is one of the many places where over population of greedy pensioners are dragging there countries down.
    Basically there are not enough young people to support This greedy older generation never mind paying for there massively over priced houses.
    Check your birth rates if you don’t believe me also good look with immigration
    As the Europe has found out an Islamic nightmare is rising at speed.

    • BobinOz December 1, 2014, 5:26 pm |

      Well I’m glad you found a huge group of pensioners to blame John Thatcher, obviously you need to blame somebody otherwise, heaven forbid, you might have to start taking responsibility for your own life.

      Good luck with your attitude, I don’t think it will get you very far though.

      Cheers, Bob

      • John December 2, 2014, 7:50 am |

        I speak from facts and figures and also from an age of over 50 so I’m heading towards retirement myself.
        The last generation of pensioners have seen rises in property prices way way beyond inflation many of them also have pensions that are only a dream for the next generation. Then when we include retirement age I wonder how many young people will retire any where near as young as this generation.
        Do I hate pensioners .. Of course not I’m now on the tale end of my working life and will become one.
        HOWEVER I stand by what I have pointed out Governments are using housing as a major part of the economy encouraging buy to let and funding pensioners to remain in family houses ( in UK ) I assume Australia is similar.
        The last family house I sold in Australia I had pensioners fighting over it NO young people they could NOT AFFORD a family house.
        The western world is buckling under the pressure of an ageing population the only way to keep your country going is through either having enough children or immigration . If you are lucky the new arrivals will have Western values but if you visit many parts of the UK you will find that many do not.This also Applies To another country I love Australia.
        Who will. … Fill the supermarket shelves,empty the bins,join the armed services,be a nurse and empty the bed pans of the elderly and of course pay the massive amount of unearned money to the older generations for there houses?
        My attitude has come about though where I see the western world is going.
        note I like this web site and wish you all the best.

        • BobinOz December 2, 2014, 6:26 pm |

          Your rant is getting stranger John, you seem to be blaming the government now. I’m not even prepared to debate with you, your final paragraphs make absolutely no sense to me whatsoever.

          Hey, but I’m glad you like my website though 🙂

          • John December 4, 2014, 7:16 am |

            But you haven’t debated with me .
            You have told me I have a bad attitude but you have not argued with my points.
            Winston Churchill said there is nobody as stupid as your average voter and having spent time with some people in local Government I know this to be true. ( this statement is not aimed at you)
            The media shows everything as black and white this is rarely the case.
            Give me facts and figures to prove me wrong there are two sides to and argument I await your side.

            • BobinOz December 5, 2014, 9:39 pm |

              Yes, I know, that’s why said I’m not even prepared to debate with you.

              Somebody, not Winston Churchill, who knows who, probably said something like “you can only argue with logic” and as I find a lot of your statements illogical I won’t be taking part in any kind of debate with you.

              Nothing personal, but on this page I only want to talk about house prices and the cost of living in Australia. Not “Who will. … Fill the supermarket shelves,empty the bins,join the armed services” etc.

              Thanks for the offer though 🙂

              • John December 7, 2014, 9:25 pm |

                I’m sorry we don’t seem able to discuss this subject due to disagreements therefore let’s start again
                To keep the piece I will let you choose the next subject .
                Would you like to discuss Politics or religion?

                • BobinOz December 8, 2014, 5:16 pm |

                  I think you are confused John, this isn’t a debating forum, it’s a website about life in Australia.

                  • John December 9, 2014, 2:50 am |

                    I know .
                    Which brings me back to my original point that house prices in Australia are massively over valued they have one of the lowest population per square mile of any developed country in the world yet they want silly money for the property.
                    The only argument left is who is to blame.

                    • BobinOz December 9, 2014, 4:23 pm |

                      Which is not an opinion I subscribe to, if you read the above article you will see why. I’ve written tons and tons on the prices of property here compared with the UK, if you check them all out, you will find out why I feel the way I do.

                      Good to see you’re still looking for someone to blame though John 🙂

  • Col B. July 24, 2014, 5:56 am |

    Hi Bob. l’m going to be a first time home buyer soon. l’m looking at buying up to twenty acres or less with a three-bed-roomed cottage dwelling on it in the bush somewhere in Victoria, but l want to supply my own water from tanks suitable for drinking and for other uses. My issue is about land rates & council costs. Is it true that the bigger the land l own, the bigger the rate costs per acre?

    • BobinOz July 24, 2014, 9:26 pm |

      That’s too tricky for me to answer Col B, hopefully somebody else reading this might be able to throw some light on it. But the way I see it, if you’re out in the bush, supplying your own water, I suspect you won’t have much streetlighting, or buses swinging by, nobody is going to empty your bins for you, you should be on reduced rates!

      Generally speaking, rates are linked to the size of land for most housing, but when it gets to acreage, maybe the scale is different, maybe there’s not much difference between 5 acres and 20 acres, but I just don’t know.

      If nobody here can help out, maybe a quick call to Victoria Council?

      Also, do check whether there are any first-time home buyer grants going, the federal government have offered that from time to time and maybe some states might do so also.

      Cheers, Bob

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