What is the cheapest Australian city to live in? If we're talking about university cities, the answer is Hobart.
The most expensive Australian city to live in? For students and non-students, it is Sydney.
The ranking of major university cities from cheapest city to most expensive is: (1) Hobart, (2) Adelaide, (3) Newcastle, (4) Brisbane, (5) Wollongong, (6) Gold Coast, (7) Melbourne, (8) Perth, (9) Canberra and (10) Sydney.
The cost of accommodation is the major cause of differences in living costs across Australian cities. In turn, living costs significantly influence the overall quality of living.
In Sydney, the median house price is upwards of $600,000. In Hobart, it's less than $350,000. Disparities in housing prices flow through to rental costs - the cost of renting in Sydney is also close to double that for Hobart.
The costs of non-housing goods and services are actually similar across Australian cities. Statistics indicate there is no more than a few percentage points difference in non-housing costs between any two cities.
While there may be significant differences for certain types of goods and services, especially those that are costly to freight, across a basket of consumption items the differences tend to cancel out.
Price differentials are also small for spending categories that cover many items - such as Food, Clothing & Footwear, Household Items & Services, Transportation, Recreation and Financial Services. Even comparing the most expensive city for a category with the cheapest city, the price difference is almost always under 15 per cent (NATSEM).
Example BudgetWeekly CostsRent: $200Food: $175Public transport: $40Energy, phone, etc: $35Spending money: $100Total: $550 per weekAnnual cost: $28,600Source: UWAStudents generally have tight budgets and try hard to minimise spending. Expenses tend to be reduced to essential items - such as accommodation, food and electricity - and some spending money for social activities.
A fairly typical budget for an Australian student might add up to around $500-$600 per week and close to $30,000 per year. Students who live frugally - or at home - could live on less than $20,000 however.
Accommodation typically accounts for 30%-40% of living costs for students living away from home. For example, a student might spend $200 pw (per week) sharing a $400 pw flat with another person (or sharing a $600 pw house with two other people). This works out to $10,400 per year.
Using a budget method, we've calculated an index of living costs by city. The base-case budget is for a student who lives in Melbourne and spends $480 per week, including $180 on rent.
Accommodation costs are the main cause of differences in overall living costs, so the budget is adjusted to account for housing prices. If the student lived in similar accommodation in Hobart, he or she would pay more like $124 per week instead of $180. If he or she lived in Sydney, rent would be closer to $226.
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Overall, the cost of living ranges from $22,000 per year in Hobart to more than $27,000 in Sydney. This shows that choice of city can significantly impact on living costs. Choosing a cheaper city means you can save money, live in nicer accommodation, or have more money (up to $5000 or so) to spend on other things.