CommSec chief economist on the price of iPhones

  • By Andrew Starke

Australia is no longer amongst the cheapest places to buy popular technology when measured against other countries and is “far less globally competitive” than even a few years ago, according to CommSec chief economist Craig James.

CommSec’s annual review of tech purchasing power revealed that Australia was now the 25th cheapest place to buy an Apple iPhone 7 of the 57 nations surveyed. CommSec’s iPad and iPhone indexes compare the price of Apple iPhones and iPads around the world in US dollar terms.

In 2016, Australia was the 17th cheapest place to buy an iPhone 6 Plus, according to the index, which is now in its tenth year. In 2015, only four countries were ahead of Australia for iPhone affordability.

In 2017, while Australians are paying $US869.67 for a 32GB iPhone 7 (including GST), the same device can be had in the UK for $US790.65 and Hong Kong for $US715.25. In its home market of California, the same iPhone 7 can be bought for $702.54 including state taxes, CommSec’s index found.

“Simply put, Australia is no longer amongst the cheapest places across the globe to buy popular technology when measured on the same basis as other countries - that is, in US dollar terms,” said CommSec chief economist Craig James.

“The Aussie dollar has risen by 6 per cent against the US dollar over the past year. But local pricing hasn’t changed much, resulting in Australia no longer having the lowest-priced Apple products in US dollar terms. Perhaps that means price cuts lie ahead when Apple updates its latest tech devices.”

‘Far less globally competitive’

CommSec launched its iPod index in January 2007 as a way of looking at purchasing power theory. The theory suggests that the same good should be sold for the same price across the globe once exchange rates are taken into account. As the technology evolved, CommSec shifted its survey to include Apple iPad and Apple iPhone prices.

“The CommSec iPad and iPhone indexes shows that Latin American, northern and eastern European countries still pay the most for their tech devices. Australian customers still remain in front of European customers in paying for iPads but have fallen below a number of European countries on iPhones,” James said.

“Australia is more middle-of-the-pack to buy the must have tech devices as Apple pricing and the stronger currency has pushed us away from the cheapest levels. Changes in Australia's relative position over time always reflect fluctuations in the exchange rate as well as local pricing by Apple.

“Last year, the Aussie dollar was near US75.7 cents. Today the Aussie dollar is near US80.5 cents and this change has led to Australia slipping down the leader-board on US dollar pricing of the iPhone 7 and being little changed on the iPad index. But we’re far less globally competitive than a few years ago.”

According to CommSec, Hong Kong and Japan are cheapest to buy the iPad Pro 10.5-inch model on current exchange rates. Saudi Arabia and Japan appear the cheapest places to buy an iPhone.

On both iPads and iPhones, Brazilian and Argentinian customers pay the highest prices in the world to buy the latest technology, James added.