World Comparisons Irrelevant

You’re sitting down about to read the paper or watch the nightly news or one of those incredibly intellectually  stimulating current affairs programs and  the headline grab is something along the lines of:

Australian Property – some of the most expensive in the world!

Melbourne / Sydney – in the top 10 most expensive cities in the world to live!

Rents are some of the most expensive of anywhere in the world!

Cost of Living – in ‘X’ city in Australia is in the top 10 in the world!

These types of stories make for good press and they talk to a lot of the population base who do think that Australia is an expensive country to live in. However, in these press articles or TV segments, it’s clear that a ‘balanced view’ is lacking. The reality of the situation is that compared to other countries and cities, our costs and prices might seem high, but if you were to compare apples with apples, then the comparisons are very much misplaced.

The reason why most things seem expensive compared to other countries and cities are because our incomes are significantly more than most countries on the planet.  That income is a direct link to the measure of affordability and the resulting standard of living we enjoy.

Those of you who have travelled extensively know that many countries have a very low to moderate standard of living as this is a direct result of the incomes they earn, as their countries develop.  Of the developed countries the correlation to income and values still rings true.

Let’s compare the minimum wage of the ‘Home of Capitalism – America’ against ours;

America = $7.25p/h

Australia = $15.51p/h

We’re over double their minimum hourly rate!

Also if we add to the incomes argument the fact that over 80% of our land mass is very uninhabitable or not developed, causing the vast majority of our population  to live within 2 hours of a major capital city, this adds the ‘demand’ element to the value equation  and hence you get high values and cost bases.

There are so many other factors at play as well, but I think my point is made – compare countries with the same income and same land conditions and try to argue these points – You can’t.  So don’t get drawn into this argument yourself when it’s a completely irrelevant comparison.