Sydney 7th most expensive city in the world

The year 2011 has seen Sydney overtaking New York and London to become the 7th most expensive city in the world to live.

The UBS Pricings and Earning Study 2011 Updateⁱ claims that living costs - excluding rent - in laid back Sydney are comparable to cities such as Oslo and Zurich. With costs showing no sign of easing, and Australians' credit card balances at almost $49.2 billion ⁱⁱ, maintaining income levels to support a comfortable lifestyle has become incredibly difficult.

Debt and the cost of living

Sydney has come in second place globally in terms of its purchasing powerⁱⁱⁱ. But this statistic does not come without baggage and has taken its toll on the city's rising cost of living and levels of debt.

The cost of living in Sydney is growing in line with national trends, with Australian Bureau of Statistics (ABS) data showing that the cost of living for working Australians is rising faster than general inflation^iv. There are many factors that come into play, one of which is the higher household residential and consumption patterns that have been affected by the urban population's lifestyle choices.

Mortgages

Real estate is an expensive asset and for most Sydney-siders it can be a hefty contributor to existing financial stress. According to Residex^v figures, the average cost of a house in Sydney is now $651,500, which is nine times higher than Sydney residents' average annual income^vi. With such a high debt to household income ratio, more Australians are falling behind on their home loans^vii.

Beyond rent and mortgage payments, ABS data reveals that 65% of Australians have non-mortgage debts^viii, such as personal loans taken out to fund the purchase of a car or to pay off study fees. Young and middle-aged households are most likely to incur such debt, with between 66 - 79% of people owing money for personal expenses^viii. Australian Reserve Bank figures show that these personal debt levels have increased by 42 percent over the last five years^ix. With personal, non-mortgage debt now averaging $3321 - three times that of the Australian average weekly income of $1026^x - the financial burden of the nation and Sydney-siders is heightened.

Securing your family's future

Existing personal and household debts combined with an upsurge of living costs beg the question: What would happen if a loved one who contributes to the family income passes away? As distressing as the loss would be, it may be even more burdensome with unnecessary financial stress if proper planning is not in place. On top of worrying about how to fill the income gap, there are additional costs that may need to be considered following a loved one's death such as funeral costs, income tax payments and legal expenses.

The best way to ensure your family doesn't spiral into debt is by leaving them with a solid source of financial support. A life insurance policy such as the Allianz Life Plan may be a solution. Payments received out of your chosen policy may enable your family to get back on their feet and avoid unnecessary financial stress. Get a life insurance quote online today from Allianz to start securing your family's financial future.