Australia’s least expensive address

One of the big surprises to emerge from the 2014 Household, Income and Labour Dynamics in Australia (HILDA) survey was that cost-of-living levels for retirees were determined by where they lived.

The Australian Centre for Financial Studies’ (ACFS) analysis of the HILDA data found that while “the level of household income has some influence on expenditure … household location appears to have a much greater impact’’.

If expenditure levels showed greater variation by location than by income groups, then clearly some parts of Australia were more expensive to live in than others. Unsurprisingly, rural areas had lower costs of living than the cities.

More than 2000 respondents over the age of 65 participated in the survey. About 25 per cent of them were totally self-funded, another quarter relied in small part on the Age Pension and about half were entirely reliant on Centrelink payments.

In geographical terms, the starkest contrast was between Sydney, where the average yearly household spend was $44,672, and rural South Australia, whose households averaged half of that expenditure at just $22,000. 

From those statistics, it is clear that the cheapest region to retire to is regional South Australia, while the capital of New South Wales is the most expensive.

The next costliest place is Perth, followed the Australian Capital Territory, then Brisbane and Melbourne, which are on a par. Next is the entire Northern Territory, then regional areas of Queensland, NSW, Victoria and Western Australia. Tasmania is the second cheapest place to live for retirees.

“The relationship between the variation in the cost of living by location and the level of household expenditure is an important finding of this study,” ACFS researchers said. “It suggests that location could be a critical piece of demographic information in the determination of a household’s required level of income for retirement.”

ACFS continued that the findings suggest “geographic location becomes an important consideration when estimating what income is required to achieve an adequate standard of living in retirement”.

“In addition, this study has shown how significantly expenditure levels vary by locations, reflecting differences in cost of living.

“Locational data – including for some superannuation funds with concentrations of members in a specific demographic location – may be extremely useful in future product design,” the researchers suggested.

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Written by Olga Galacho

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