I have always stated on this blog that Australia’s houses are cheaper than those in the UK. But as property values fall back in Britain and the pound versus the Australian dollar tumbles, I am forced to relook look at the figures. If you want to check out my original post, you can read it here…..
Also, at the foot of this page, you will find a link to an update on house price information from April 2016.
This revision doesn’t make for pleasant reading, although there is a twist in the tale.
When I agreed a selling price for my house back in the UK in September 2007, one Great British pound would buy around $2.45 to $2.50 AUD depending on which day you looked. In fact, during the previous month of August, the pound was at one stage worth $2.56 AUD. But by the time the sale had gone through and I actually had the money, the pound had fallen and was now worth just $2.25 AUD. And the rate I actually achieved when I bought the Australian house was $2.26 AUD.
I was gutted!
In the space of less than one month I’d lost about 10% of the sale proceeds of my home and it was all down to the spectacular crash of one Northern Rock Building Society. Of course, looking back I realise what a lucky escape we actually had. If my buyer had got the jitters and pulled out, I might still be stuck with that English house today. And today things look very grim, like this…
But first, let me remind you of the deal I did do. I sold this house, 30 miles or so from London…..
And I bought this one in Australia, 15 miles or so from the centre of Brisbane…..
My Brisbane house cost me 63.5% of what I sold my UK home for, based on that exchange rate of $2.26. As my Australian house is on land at least 6 times bigger than the old one and the inside is at least twice as big AND I paid less than two thirds of the cost of my old home, it was a fair assumption to say houses cost less here, wasn’t it?
But what if I were selling today?
Firstly, property prices have fallen in the UK in the last 2 1/2 years, so I’d have to sell it for less. I have heard rumours of massive house price crashes but when I checked online to see what is currently available in my old area, I don’t really see any evidence of those big falls. At worst, I believe my old house has dropped no more than 10%.
But the biggest difference between now and the end of 2007 is the exchange rate. No longer do I get $2.26 for every pound, today I would get just $1.65. To make matters worse, house prices here in Australia have risen by 9.5% since the original deal.
So now I am selling my English house for 10% less, buying my Australian home for almost 10% more and in the exchange rate I’m losing around 27%. GULP!
I’ve done the maths for you. If I were doing the deal today, instead of buying my Australian home for 36.5% less than I sold my English place, I’d be paying 5.5% more. As I said, looking back now, I can see how fortunate I was.
So are houses cheaper in Australia anymore?
You could still argue that for about the same money I have bought a house that is much larger as well as being on much bigger land. On the other hand, I haven’t moved up any in terms of “social class”. I lived in a nice four bed detached house in England and I live in a nice four bed detached house here in Australia.
So, on current figures, I can only conclude that house prices are no longer cheaper here in Australia. But at the same time, I can’t say they are more expensive either. But then I thought, “Hold on a minute! Why don’t I do some proper research?” So I did and the results really quite surprised me.
This was a BIG surprise!
Believe me, I wasn’t expecting this.
According to RPData.com these are median prices for houses and units in the major cities of Australia as at December 2009.
|City||House Price||Unit Price|
RPData update these figures regurarly, but the figures above were correct at the time of writing this article.
According to the BBC, these are average house prices in the UK as at June 2009.
- Average house price in the UK £224,064
- Average Detached house price is £344,989
- Average Semi-detached house price is £196,506
- Average Terrace house price is £177,633
- Average Flat price £199,669
The BBC also update their figures too and again the prices above were correct at the time. For the latest figures, click here.
Now I know one is for June and the other is for December and one is for median and the other is for average, but these were the most reliable figures I could find. So I’m not going to draw too many conclusions, but I do want to make the following observations.
I am pretty certain that when Australia talks about a “house” price, it is referring to detached properties. When they talk about a “unit” price then that can be anything from a semi-detached house, a terrace or a flat. So for me, the best direct comparison is an English detached house with an Australian house price.
At the current exchange rate of $1.65 that makes the average detached house price in the UK $569,231. That’s over $87,000 dearer than the average Australian house making UK homes 18% dearer.
Also, taking the average annual salary in the UK, which we previously agreed on our post comparing Australian and UK salaries to be something like £26,470, it would take 13 years worth of wages (ignoring silly taxes) to buy a detached house of average value in the UK. Here in Australia, where the average salary is $62,270, it would take just 7.7 years to buy an average detached house here.
So, would anybody like to tell me which country has the cheapest housing now?
Of course, house price comparisons are a moving target. This was all about 2010, but that was a long time ago. Here’s what I had to say about this subject in April 2016: