Aug 202015
 

Best Cities In the World

The Economist recently released its new livability scale report. This study compares 140 cities across the world and ranks them based on factors such as political stability, healthcare, safety, and educational resources. Canadian and Australian cities dominated the top 5 spots for having the best koala-ty of life! 😀 Below are the top five cities in the list.

  1. Melbourne, Australia
  2. Vienna, Austria
  3. Vancouver, Canada
  4. Toronto, Canada
  5. Calgary, Canada and Adelaide, Australia

Similarities Between Canada and Australia

This is probably not a big surprise as both countries have a lot in common. We both export boat loads of natural resources. We have low population density and most people live in small to medium sized cities. Our economies are similar as well with national GDP in the $1.5 to $2.0 trillion range.

15-08-australia-canada-economy

Even our currencies are roughly the same in value. $1 CAD currently trades for about $1.04 AUD, lol. The stock market returns between the Canadian TSX Composite index and the Australian S&P All Ordinaries index (XAO) over the past 5 years are practically identical. Both stock markets returned about 18% since August 2010.

15-08-australia-canada-stock-market-comparison-5yrs

I’m not sure if it’s even necessary for Canadians to buy Australian stocks for diversification purposes, and vice-versa, because it might not make any difference in the long run.  😕

High Standard of Living Comes at a Cost

With all the similarities between the two countries, it’s no wonder we rank similar in the list of best places to live. 😀 Real estate is expensive in many parts of both countries but it makes sense for people to pay a premium to live in the best locations in the world. Some Canadians believe real estate in Vancouver, Toronto, and Calgary are over priced. But we’re pretty fairly valued relative to Australian prices.

In Melbourne, Australia, which ranked number 1 as the most livable city, the average house price was $590,000 in 2014. This was up 8.5% from the previous year. But interest rates are higher in Australia than in Canada. Right now a Canadian mortgage is about 2.5%, but a mortgage in Australia costs about 5%. If Canadian mortgage rates doubled to 5% then I’m pretty sure Vancouver’s average house price would drop like a rock. If Australia mortgage rates were cut in half, then the average house in Melbourne would probably cost more than $1,000,000. So if we correct for the cost of borrowing then Canadian real estate prices are actually on par with Australia’s. Of course one could say that both country’s real estate prices are overvalued. This may be true, but so is just about every other country’s. And since we all have to live somewhere, when everything is overvalued, nothing is. 😉

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Random Useless Fact

Tony Abbott, the Prime Minister of Australia, has 546K followers on Twitter. Stephen Harper, the PM of Canada, has 871K followers.

 

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Anon
Anon
08/20/2015 3:59 pm

Don’t forget that both countries’ major trade partner is with the world’s largest economy (depending which numbers you believe) — Canada:USA, Aussie:China.

For vacation spots, Bali is to Australia what Mexico is to Canada: close, sandy, cheapish, and semi-dangerous.

Koko
Koko
08/24/2015 8:40 am

Let me add : yuan now almost tie with US dollar thanks to Chinese govt smart plan all these years… They export in USD and hoard / invest it in overseas bonds etc so when dollars strong against other currency yuan remain strong thanks to Chinese govt usd reserve. They can pegging their currency. Yuan might not freely trade like USD but Chinese bold move recently to lower Yuan killed two bird with one stone, first to keep their export remain competitive, second to make Yuan as reserve currency other than USD…. Sorry for the bad English, Bali reader here…..

roadmap2retire
roadmap2retire
08/20/2015 6:45 pm

Agreed with what Anon said above – the trading partners make us more similar than differentiate – Canada with US and Australia with China.

I’d still like to get some exposure to Australia though – I just picked up BIP earlier this week – which bought out Asciano – an Australian company and BIP’s will have its biggest part of revenue coming from Australia after this deal. I am contemplating picking up an Australian bank maybe – WBK — but its way down on my list for now. Hopefully I’ll get to it one of these days.

R2R

Anon
Anon
08/21/2015 6:23 am

The two countries also have similar banking systems (i.e. not American style).

One difference: the Australian stock market was the world’s best performing market (7.5%/yr) over the last century (1900-2010); the Canadian stock market…not so much.

Anon
Anon
08/21/2015 9:52 am

Neither the Dow nor the S&P out-performed the Aussie market over the last 110 years — no stock market did.

A good example of the benefits of diversification by location.

Anon
Anon
08/22/2015 8:51 am

To further the analysis:

http://www.cbc.ca/m/news/topstories/livable-cities-rankings-what-do-they-actually-mean-1.3198006

“…these surveys are inherently limited and unintentionally misleading…in that many of the measures — including health care, education, even infrastructure — aren’t actually the purview of cities, but are administered by the federal government or regional territories such as provinces.

The fact that Canadian and Australian cities are perennial favourites on the list owes a great deal to the generosity of higher levels of government in those countries…”