A six-figure salary used to be the mark of a good income – now it’s the amount the average Sydney family will need to spend each year simply to live in the Harbour City.
New data on the full costs of living in Sydney, including everything from petrol to groceries, energy and housing costs, has revealed a family of four needs to spend $105,000 a year just to get by.
Living in Sydney has also became nearly $30,000 a year more expensive than Melbourne, according to the Canstar research – but incomes in the NSW capital are only marginally higher.
Sydney was one of Australia’s cheaper places to live when it came to electricity and petrol costs, along with the prices of groceries, but remained by far the most expensive city because of housing costs.
Canstar director of research Sally Tindall said the research laid bare the incredible impact of record inflation levels and 13 interest rate hikes between 2022 and 2023.
Canstar research director Sally Tindall said record inflation has taken its toll on families. Picture: Tim Hunter.
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Life was “incredibly tough” for some families and property price rises in key hot spots had thrown family finances “out of kilter”, she said.
The findings might come as a “light-bulb moment” for some to “up and move to a different part of the country”, Ms Tindall added.
The $105,000 a family of four needed to spend on Sydney living costs was higher amount than the average NSW pre-tax wage of $100,600 a year before tax, according to the ABS.
About $80,000 of that cost went into paying the typical mortgage repayments due to Sydney home prices being nearly $200,000 higher than those in Melbourne and Brisbane.
That staggering mortgage bill was higher than the $75,000 a year needed for a family of four to live in Melbourne and the $79,000 required to live in Brisbane.
Canstar’s living estimates were based on the average rates of consumption for various living expenses in each city and mortgage costs were calculated based on current interest rates and median prices.
Housing costs are by far the biggest expensive in Sydney. This Petersham house recently sold for $4m.
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Sydney was the second least affordable major city in Australia to be a renter behind the Gold Coast.
A typical family of four renting in Sydney needed $65,000 to pay all their living costs. In Gold Coast, the average cost of living was $75,000 a year.
Finder insights manager Graham Cooke said extreme housing costs had shattered any illusion that it was possible for a family to survive on one income.
“With grocery bills, rent, and energy prices soaring, the upcoming election will be won and lost on hip-pocket issues,” he said.
Ms Tindall explained that economies of scale and greater competition among businesses meant Sydney costs such as groceries and petrol were marginally lower than in other capitals.
Melbourne still remained more competitive than Sydney in most of those costs, because of a variety of factors including greater investment in energy infrastructure and lower insurance premiums, Ms Tindall said.
Source: Canstar
The cost of living impact of US President Donald Trump’s flip flopping on tariffs was hard to predict, she added.
“Some prices will go up, some will probably go down,” Ms Tindall said. “We’ll probably need to adjust but what’s important to understand is that we’ll be doing it from a reasonably decent base.
“Unemployment is sitting at 4.1 per cent … the economy is growing and the rollercoaster ride that was inflation is now heading back into the terminal.
“These are solid foundations from which to tackle an economic crisis, should one materialise … Now is not the time for panic.”
Northern beaches resident David Stableford recently refinanced to a cheaper mortgage and said living in Sydney required capitalising on potential cost savings whenever possible.
The cost of housing in Sydney is more expensive than in much of the UK believes David Stableford, pictured with his family Alex, Amber (11) and Evie (8). Picture: Jane Dempster
“I don’t like giving the banks money they don’t need,” he said. “We rode all the interest rate hikes through and we took our chance as soon as we saw there was a chance to get some savings.”
Mr Stableford said a recent two-year stint in the UK opened his eyes to the true costs of living in Sydney.
Energy and transportation costs in the Greater London area where he was living were substantially higher than in Sydney, but the Harbour City was more expensive for groceries and house prices.
“The UK is more expensive for most things but when it comes to house prices Sydney is crazy. Where we’re living is absolutely crazy,” he said.
Mortgage Choice broker James Algar said grocery bills were often the biggest expense for loan applicants after housing costs. Picture: Britta Campion
Mortgage Choice broker James Algar said the problem for many Sydney families is that they stretched themselves to get into the housing market during Covid – only for interest rates to then go up.
Since then most families have had to really hunker down, evidenced by the expenses they’re listing in the loan applications, Mr Algar said.
“Before Covid, you’d typically see a lot more frivolous spending from first-home buyers or refinancers on things like entertainment and uber eats.
“We’re not seeing that as much anymore. Now the biggest expenses after housing costs are essentials like groceries and childcare.”
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