Australia is experiencing record levels of inflation as a result of knock-on effects from the COVID-19 pandemic, the war in Ukraine and strong consumer demand.
The cost of living in Australia is rising – quickly – and it's expected to keep rising into 2023. We had 8 cash rate hikes (from 0.1% to 3.1%) in 2022, and the latest quarterly inflation figure was 7.3%.
Inflation will hit nearly 8% in the last three months of this year and is now expected to take well over a year to go back down. Not until 2024-25 will we see wages growing faster than prices, as the next chart shows. That leaves Australians further behind.
Although Australia is one of the most expensive countries to live in, residents enjoy some of the highest purchasing power in the world. The country ranks No. 3 in this regard, granting its citizens almost 5% more purchasing power than the U.S.
Consumer price inflation has been rising in many countries since 2021. Pandemic-related supply shortages are a main factor. As the global economy recovers from its recession, there has been increased demand for products – especially consumer goods – and materials.
The high rate of inflation has contributed to a cost crisis – more commonly referred to as a 'cost of living crisis'.
With inflation still rising, goods and services continue to increase in price. According to the Bank of England, however, they expect this rise to slow down in 2023 and be around 2% in 2024. But even if their predictions are accurate, the prices we pay for things may remain at a high level compared to previous years.
Gold Coast is one of the cheapest places to live in Australia (89th globally). It is known for its high-standard education and academia and its budget-friendly living. International students will find the Gold Coast the perfect combination of study and social life, with its magnificent beaches and nightlife.
Housing in Australia is much more expensive than the UK.
Estimates suggest the average Sydney home will be close to $1.8 million, up from $1.6 million. Apartments will also break the price ceiling up from an average of $780,000 to an inconsolable $1.26 million.
Read our editorial disclaimer here. Australia is experiencing record levels of inflation as a result of knock-on effects from the COVID-19 pandemic, the war in Ukraine and strong consumer demand.
We Expect an Earnings Recession in 2023
Our base case for 2023 is that Australia is likely to experience an earnings recession even if we do not suffer an economic recession. The reality is that the starting point for earnings is at a historically very high level.
Why is property so expensive in Australia? A number or reasons, such as foreign investment, stronger land regulation, prohibitive tax systems, a highly urbanised market and more.
Sydney Is Still Australia's Most Expensive Place To Live, but Melbourne and Brisbane Are Not Far Behind. Singapore and New York have tied for the title of world's most expensive city in this year's Worldwide Cost of Living report.
The pain is set to continue for many more months to come unless the Reserve Bank swings 180 degrees and starts cutting interest rates. Contrary to the “hopeium” out there, there is currently zero evidence that the great Aussie housing crash is bottoming out.
Part of: Australia's welfare 2021
Governments across Australia fund services to support people who are homeless, or at risk of homelessness.
Canberra is the happiest capital of Australia, according to research.
Most affordable suburbs in 2022
Kambalda East in Western Australia was named the most affordable suburb for houses, with a median value of $118,525. For units, the most affordable suburb was Laguna Quays in Queensland, with a median value of just $72,076.
Caldwell estimates that the inflation rate will average around 1.5% between 2023 and 2025. “While consensus has largely given up on the 'transitory' story for inflation, we still think most of the sources of today's high inflation will abate, and even unwind in impact, over the next few years,” Caldwell says.
One of the biggest changes you can make to lower your cost of living is to move to a new location where those costs are simply lower. For example, although you'll always pay some taxes, you could move to a state without income tax, such as Texas, or one without sales tax, like Oregon.
In 2023, all food prices are predicted to increase between 3.5 and 4.5 percent, food-at-home prices are predicted to increase between 3.0 and 4.0 percent, and food-away-from-home prices are predicted to increase between 4.0 and 5.0 percent.