Canberra is one of the most expensive places to live. You may be wondering why is Canberra so expensive compared to other cities in Australia. While renting in Canberra is definitely more expensive, other expenses can be cheaper than the national average.
So Why is Canberra so Expensive
While it’s a little difficult to pin point one exact reason, here are some of the factors that contribute to high living costs in Canberra.
Rapid Population Growth
Canberra has seen a population explosion over the past decade. Canberra quickly grew from a sleepy suburbia into a thriving city. While there has been constant construction of new apartments, it hasn’t been able to keep up with demand.
Developers have no problem selling Apartments off the plan in Canberra and demand for exisiting property has been high. This demand increased after Covid-19 lockdowns.
With so much demand for real estate, the price of apartments and housing has increased. There isn’t a lot of good data on house prices in the ACT. So it’s hard to compare it to the rest of the country.
Low Vacancy Rate
It’s more expensive to rent an apartment in Canberra than any other city.
Canberra has an extremely low vacancy rate in rental properties. The vacancy rate is consistently under 2%. As of writing it was as low as 0.7%. This means there just aren’t enough properties for people to rent.
With limited supply and huge demand, the prices keep getting pushed higher.
Highest Average Income in Australia
Based on the most recent data available (2019 Census), Canberra has the highest average income in Australia. The median income in Australia is approximately $51k per annum. In Canberra the median yearly income is $66k. That is much much higher than the rest of the country.
This means that the average person in Canberra has more money to spend which will drive up prices.
Less Competition
Canberra is a smaller city which means there are fewer businesses and less competition. There tend to be fewer “cheap eats” type places compared to Sydney or Melbourne. Canberra also has some weird quirks in certain industries. For example, Petrol in the ACT is consistently more expensive than other majors cities and no one really knows why. The retailers know they can charge more, so they do. With no independent retailers there is no one pushing down prices.
And then there have been some weird events which have created unexpected cost of living pressures. For example there was a powerful hail storm a few years ago which damaged a huge number of cars in Canberra. It became near impossible to buy a used car and prices were driven up.
It’s more expensive to eat out in Canberra and while Canberra has some of the best bars in the country, there aren’t as many “cheap” places for a night out compared to the bigger cities.
Our Climate
Canberra has cold winters and hot summers. If you live in a well insulated place, then heating and cooling bills can be very reasonable, but if you’re living in a large house or an older building you may have higher energy bills.
Where Canberra is Cheaper
It’s not all bad news on cost of living in Canberra. While renting and buying property in Canberra is expensive there are other areas where it’s actually cheaper.
Groceries in Canberra
I’m not entirely sure why, but Groceries in Canberra are ever so slightly cheaper than the national average.
Electricity Prices in Canberra
Canberra is unique when it comes to Electricity prices. For years, Canberrans were paying more for electricity. This is because the ACT government locked in a deal to transition the territory to 100% renewable energy. There is a flip side, when the price of electricity rises, the energy companies have to pay money back to the ACT. If electricity prices soar, the ACT is somewhat insulated. You can find out more about how this deal works here.
Is Canberra Going to Become Less Expensive?
I don’t believe that the housing situation in Canberra will always be like this. It’s not something that you can just magically fix with a government policy or program. While the ACT government has been taking steps to address cost of living, it’s something that will take a long time. Canberrans don’t want to see urban sprawl with lifeless suburbs that you see in the outer edges of Melbourne and Canberra. And we also just don’t have the space. So creating more housing for renting and young buyers isn’t an easy issue to fix.
Here are some of the things that may have an impact of the cost of living in Canberra:
- Build to Rent properties – There are a number of new developments in the pipeline that are build to rent. This means they won’t get sold to overseas investors or baby boomers looking for a new investment. All of these apartments will be rented out.
- More Apartments being built – More housing is being built across Canberra. While there isn’t a lot of new freestanding developments there are a lot of new apartments.
- Better mix of Housing – We’re starting to see a better mix of housing in Canberra. Some houses are being demolished and replaced with town housing. If you walk through a suburb like Dickson you can now see a mix or apartments, town houses and houses all together. Which is a more sensible density for urban Canberra.
- Better Public Transport – Canberra’s design is a nightmare for public transport. But thankfully steps are slowly being taken towards better Public Transport. The light rail is getting extended to connect the City with Woden.
