If you are thinking of moving to or visiting Australia, you will quickly realize that it can be an expensive place.
There are some great things about Australia, but many will have a hard time justifying the costs.
If you are wondering the reason behind these costs, we have some answers that may help you.
Here are ten reasons Australia is so expensive.
Most of these, you won’t be able to control, but it could help you make some smarter decisions about Australia in the future.
Why Is Australia So Expensive? (Top 10 Reasons)
1. High Taxes
Australia is known for having very high taxes.
The more money you make in Australia, the more you will be hit with high tax payments.
These higher taxes can make it difficult for people to feel as though they are getting ahead.
When a large portion of your income is going back to the federal government, it feels as though you are getting nowhere with the money you are making.
Of course, there are some benefits to higher taxes that many Australians will admit.
People who have to pay these taxes also realize that the federal government has more funds in place to keep Australia looking good and functioning well.
There are studies that have been done that say that Australian people are some of the happiest in the world.
This helps people to justify this high cost of living, and know that it makes more sense to live in Australia.
Just make sure that you consider the tax rates prior to making a move to Australia.
If you think you will get all of your income when it comes in, you have to think again.
2. High Energy Costs
Another issue that is increasing the costs in Australia is the high energy costs.
Australia’s energy costs are some of the highest in the world, and they are just now starting to work on using some renewable energy sources instead.
Australia has lots of open land that can be used for wind and solar power if it is utilized the correct way.
Years ago, the energy industry was transferred to private businesses in hopes that they would be able to lower the cost for residents in Australia.
The problem is that there are only two companies, and they play against each other a bit to keep raising the prices.
You will notice this happens quite a bit in Australia.
There is just not enough competition in the industry for people to be able to benefit from lower pricing.
Instead, the pricing is high, and it becomes nearly impossible to afford some of the electricity bills in the months where more electricity is needed.
Australian homeowners are starting to get savvier when it comes to making their homes more energy efficient.
3. Shipping Costs
It’s not easy to get products to Australia.
The transportation costs are going to increase considerably because of how far away Australia is from other countries.
They still need products brought in, but the shipping process by both air and sea is expensive.
Another thing to keep in mind with shipping costs is that it is not just about getting the supplies to the continent, but also distributing goods around once they are on the land.
The people of Australia are quite spread out, which means there is quite a bit more transportation and logistics involved in the process of getting people the things they need.
Shipping is something that is calculated into almost anything that we use in our lives.
If you order a product and it says that it is shipping free of charge, chances are there is shipping calculated into the price.
Those living in Australia have a difficult time buying locally because of the access to things to purchase.
They find that there are better deals and a much larger selection when shopping outside of Australia and having things sent in.
These high shipping costs are going to certainly increase the overall price that people pay for living in Australia.
4. Less Competition Between Sellers
Although Australia covers a good bit of land, there is not nearly as much competition between the people who are selling goods in Australia.
The populations of most of the small cities are relatively low, and businesses have a hard time finding a place to settle.
Once these businesses settle in their places, they realize that they have a pretty good handle on the market.
At this point, the prices start to go up.
If there is nobody else nearby, the businesses know that they have a hold on the market, and they continue to increase prices.
Many people worry about this when it comes to groceries.
In Australia, there are really only two main grocery stores.
They don’t have very much competition, so they can charge higher rates for the food that they sell.
This makes it difficult for people to find great deals and to save money.
More and more competition will tend to drive pricing down as people have to compete with each other.
In Australia, this is not the case because the choices are so limited anyway.
5. Small Population but Large Area
Australia is expensive because they have a smaller population spread out over a very large area.
When a large group of people can work and live together in a major city, the pricing is sometimes a bit more affordable.
These people can use the access to products, restaurants, and businesses in the local area to try and work out better deals.
However, in Australia, you are dealing with a very large mass of land, and the number of people covering the entire mass of land is not all that large.
This makes the logistics of things much more difficult, and therefore, the pricing on almost anything goes up.
Even companies that build homes or do construction work for residents have to charge more because of transportation.
In order to service enough people to support their businesses, they have to be spread out over large expanses of land.
The problem does not seem to get all that much better as the population of Australia is still not growing all that steadily to warrant discounts from larger populations.
6. Smaller Discounts on Volume
When countries or continents import products, they tend to get discounts on the shipping and product fees because of bulk or volume.
In other words, the more you can order in one shipment, the more money you will save on the cost per item.
The fact that Australia’s population is not the largest does not help to qualify for any volume discounts.
It also doesn’t help that the price of products in Australia is known for being relatively high.
This has people accustomed to the higher pricing, and foreign manufacturers are aware of this.
This makes it difficult to charge less for products when it is looked at as free money for those exporting their goods.
7. Awareness of Price in Other Countries
Another problem for people in Australia is that, for many years, they had no awareness that there was a product available for less money.
People continued to pay more and more money because they thought it was the only option that they had.
However, as time has gone on, the prices are something that people have become more aware of.
The internet has made people realize that, if they are looking for a pair of sneakers in the UK, they will pay almost half of what it costs in Australia.
This factor has actually helped to lower the pricing of some products in Australia, but the totals are still higher than what they would be elsewhere.
So many years of having these high prices have made it so that the people in Australia have become accustomed to it.
Although there are certain shipping regulations that will cause pricing in Australia to be higher than in other places, it does not need to inflate the prices as much as it does.
For those who are tired of the pricing, there have been many more foreign online purchases in Australia.
However, a large part of the population is still not even aware of how much cheaper things are in other countries with larger populations and more of their own resources.
8. High Minimum Wage
Another area of high costs in Australia is minimum wage.
The minimum wage in Australia is much higher than it is in the United States.
The goal and concept are to see if people can support themselves and make a full living at the minimum wage rate of pay.
In most parts of America, that can be hard to do.
There are, however, positives and negatives with a high minimum wage.
Companies are forced to pay employees more, even if they are not skilled workers.
This means that, when you go out to eat at a restaurant, your pricing is going to be quite a bit higher than in other areas of the world.
Restaurants will not have any lower food costs, and they will not have extra customers, yet they still need to pay workers more money.
In the end, the issue ends up hurting the consumer.
Although restaurants can cut their profit a bit, they already run on very thin margins.
These same issues are seen in retail and labor as well when the minimum wage prices get quite high.
The concept is a good one, but the rollout and after-effects will make things more expensive to those living in the area.
9. High Land Costs
Land is expensive in many areas across the globe.
This is not something that is specific to the Australian continent.
However, the problem with the expensive land in Australia is that you can’t build on a lot of it.
These prices are charged for pieces of land that are not at all profitable for the end user.
The government sets some of this pricing so high so that much of Australia can remain protected.
Although this is a positive for the country, it tends to make it more expensive for those who are living there.
Anytime you start to limit the amount of land for building or for expansion of a city, then the pricing will undoubtedly go up.
Those who are not interested in buying land will not have to worry about this.
However, it will have an impact on other properties, and it will increase the overall cost to own in Australia.
10. Foreign Investors
Last but not least are the foreign investors who drive up prices.
With the ease of access and the internet, our world is much easier to travel and get to than ever before.
This means that people who live on other continents and find Australia attractive are going to start purchasing places to own.
Many of these people have quite a bit of money, and the already high prices do not bother them.
This means when a piece of property comes up for sale, these foreign investors can purchase it before the local people have a chance to do so.
When a property sits on the market for a while, and local people have the chance to let the price settle, they have much more negotiating power.
However, this is not the case in Australia, especially with prime real estate.
Foreign investors continue to start bringing the costs of Australia up.
One of the things that are important to remember about real estate is that people will pay what a house is worth to them.
If someone is interested in a place and they have the money, they don’t often care about what the costs are in the general area.
Many times, they will make the purchase because it works for them, and not just because the property is going for a good price.
This concept can make prices continually increase with no end in sight.
Is Australia Worth Living In?
Have you thought about moving to Australia and these high costs?
Have you been questioning this decision?
There are many great benefits associated with living in Australia, and these benefits help to increase the value that people get from living there.
If you are thinking about this type of move and change in lifestyle, there are a few good things to know about Australia.
For starters, the quality-of-life index in Australia is extremely high.
People enjoy their lives, and they have a great work-life-nature balance.
In addition to the quality of life being very high in Australia, people who live there are also happy.
People living in Australia take education seriously, and the education system is globally recognized.
This is an essential factor to consider when moving there with children.
You will also like Australia if you want some room and space.
The population density in Australia is quite low.
Although this is one of the reasons we mentioned adding to the costs, the overall fact of being around fewer people can be quite appealing.
Ultimately, living in Australia has some lifestyle choices that will go beyond just the total price or cost to live.
However, there are many happy and thriving residents who can’t imagine living anywhere else.