Going on holiday? Maybe wait to buy an iPhone. Picture: Sean Gallup/Getty Images

This time last year, Australia was the second cheapest country in US dollar terms to buy an iPad Air 2 tablet, according to CommSec’s annual iPad Index.

Today, Australia sits in 20th place out of 57 countries. Similarly, Australia has fallen from fifth place to 17th place in the cheapest countries to buy an iPhone 6s Plus.

Last year, the Aussie dollar was around 69 US cents. Today it’s sitting near 76 cents.

According to CommSec, if you assume the Aussie price for an iPad should be the same as that paid by a resident in California, then the exchange rate should be closer to 70 US cents.

“On current pricing, Aussie tourists could save over $200 by buying an iPad Pro 12.9-inch tablet in Hong Kong rather than in Australia,” CommSec economist Craig James writes.

“When the currency strengthens it does pose challenges for Aussie retailers. If they don’t pass on the benefits to customers in the form of cheaper imported goods, Aussie consumers may go online and source the goods from abroad. Or Aussie tourists may purchase goods abroad in preference of buying goods locally.”

CommSec launched its iPod index in 2007 as a modern way of looking at purchasing power theory.

“That is, the theory that the same goods should be sold for the same price across the globe once taking into account exchange rates,” Mr James writes.

“On current iPad and iPhone pricing the Aussie dollar could be regarded, at best, as ‘fairly-valued’ or perhaps a little ‘expensive’. Last year we thought the currency was somewhat ‘under-valued’.”

Source: CommSecSource:Supplied

When the index first launched, Australia was one of the cheapest places to buy an iPod Nano, and in 2008 and 2009 was the cheapest place globally.

While Australia is still among the cheapest places in the world to buy popular technology, the firmer currency means we are “no longer rock bottom”.

“The CommSec iPad and iPhone indexes shows that Latin American, northern and Eastern European countries still pay the most for their tech devices,” Mr James writes.

“Australian customers still remain well in front of European customers in paying for iPads and iPhones with the exception of Switzerland.

“On current exchange rates Indonesia and Hong Kong are cheapest to buy the iPad Pro 12.9-inch model on current exchange rates. Indonesia and the US 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.”

CommSec’s iPod, iPad and iPhone indexes are designed as modern-day variants of The Economist magazine’s long-running Big Mac Index, or Deutsche Bank’s Sin Index which tracks prices of goods such as cigarettes and alcohol.

“The index works by dividing the local price of a Big Mac by the US price of a Big Mac. This gives the PPP exchange rate. If the actual exchange rate is above the PPP rate, the theory says that the currency is overvalued, and may need to fall to bring the goods in both countries in line,” Mr James writes.

“The problem is that Big Macs aren’t exchanged across country borders. But the assumption is that Big Macs are a proxy for other goods that certainly may be traded. The other problem is that the Big Mac index assumes a US base, and thus assumes that US goods are appropriately priced.

“Like the Big Mac index, the CommSec iPad and CommSec iPod indexes assume that the same good should sell for the same price across the globe once exchange rates are taken into account. But the difference with the Big Mac index is that Apple tech devices can indeed be exchanged across the globe.

“If they are particularly cheap in one country it could cause tourists to buy their tech devices when on holiday, prompt people to buy them online in other countries, or prompt some companies to take advantage of arbitrage opportunities.”

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