What rises faster, house prices or a cup of coffee?

Australians love to talk about rising property prices.  But how do house price changes compare to price variations for other everyday goods? 

While we all love to say everything is going up and life is getting far pricier – is it actually true?

To celebrate our national day we’ve compared how much Australians spend on houses to other everyday items such as a cup of coffee and petrol.

Between 2005 and 2015, which rose faster? The price of your daily latte or houses?

A look at the numbers

We began our search by looking at the Australian Bureau of Statistics indexes for house prices and wages. We compared those numbers against the relative price of petrol, the relative price of a cup of coffee, the relative price of a Big Mac, the relative price of a bottle of water and the relative price of hot chips a the MCG from 2005 to 2015.

Sources for this data included the ABS Residential Property Price Index, ABS Wage Price Index, The Economist Big Mac Index, the Melbourne Cricket Ground, The Coffee Economist, and the Australian Institute of Petroleum.

Here’s what we found:

House prices have gone up, but Big Mac prices rose too.

Housing prices have risen faster than the price of a cup of coffee, but they have also had more highs and lows.

The amount of money you need to buy a house has increased, but the cost of that money has actually gone down.

Housing isn’t the only index that has gone up over the past decade.

But the biggest surprise?

Smoking is very expensive

Perhaps the most startling price comparison is the relative difference between how much Australians pay for a house and how much smokers pay for a pack of cigarettes.

The house price index rose 70% in the past decade while the cost of a packet of cigarettes rose by 121% from $10.30 a pack in 2005 to $22.72 today.

During the same time the number of Australians who do smoke dropped as tobacco taxes rose, public health campaigns increased and plain packaging laws were introduced.

Buying a house in 2015 costs more

“From a priority perspective, buying a house remains the great Australian dream,” says social researcher Mark McCrindle from McCrindle Research.

As the chart shows, there are times when that dream costs more: “So in 2013 house prices kicked up say compared to (the price of) Big Macs,” says McCrindle.

Market data: Why Sydney buyers may be better off

Today’s “pretty resilient” generation of buyers do take on more debt to get into their own property, but are they worse off?

In a lot of ways, we have a generation entering the property market who are a bit pickier.

“The amount of money you need to buy a house has increased, but the cost of that money has actually gone down,” he says.

“And this generation has good opportunities to pay off home loans,” he says adding that wages keep house prices in check, to an extent.

“House prices invariably come back,” McCrindle says.

“House prices and wages do have a link. We’re not seeing one go up without the other.”

Video: Helping your children to buy a home

Some items are now cheaper – no, really

Petrol is a cost most people can’t avoid and while prices are volatile, the data shows that prices have actually only risen overall by 8% since 2005, despite spikes in multiple years across the decade.

Video: How to secure your dream property

“It’s very encouraging for household budgets,” Mc Crindle says.

Petrol isn’t the only everyday item that doesn’t cost as much as we think, with relative price drops recorded for both bottled water and hot chips at the MCG. So is life really that expensive?

“As consumers complain about the rising cost of living, not all things are going up, some are actually going down,” he says. “Other prices have been going down and we sometimes forget that.”

Property predictions: What will the market look like in 2016?

Great Aussie dream & choice renters

The great Australian property dream is also changing. Where once young couples moved into a home of their own that was far more modest than that of their parents, today’s property owners are different.

“In a lot of ways, we have a generation entering the property market who are a bit pickier,” McCrindle says. “They recognise they are living longer and will have to work longer.”

“They don’t need to secure a house till later as they’re typically starting families later in life.”

So rather than living somewhere humble at first and working their way up the property ladder, some buy a home in a neighbourhood they can afford, then rent that house or unit out while renting in the suburb where they want to live but can’t quite afford.