Why are Australians paying more for iPhones?

Last year Australia was the 17th cheapest country in the world to buy an iPhone, but on the eve of Apple's 2017 iPhone 8 (or iPhone X) launch, Australia has fallen to No. 25.

With many left asking the question why Australians are paying so much for the device, a new report by Commsec on Monday believed they may have found the answer.

"It could be argued the Aussie dollar is too high against major currencies on current fundamentals," Commsec economist Craig James said in the iPhone price index report.

"Certainly at current exchange rates Australian consumers would find the latest iPad or iPhone less expensive to buy in a raft of Asian countries together with the United States and Canada."

In 2016, the Aussie dollar was buying around 0.76 U.S. cents and in the previous year, it was sitting even lower at 0.69 U.S. cents.

However, strength in commodity prices and weakness in the greenback have seen a surge in the local currency this year, with the Australian dollar around two-year highs at 80.5 U.S. cents.

On current figures, an iPhone 7 (32 GB) purchased downunder will cost 1,079 Australian dollars or 869.67 U.S. dollars when adjusted with exchange rates, but in America the price is 24 percent lower at 649 U.S. dollars.

"When the currency strengthens it does pose challenges for Aussie retailers," James said.

"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."

Although many Australians may feel as though they are getting a raw deal, most analysts still expect Apple's new model to secure record sales downunder.

A boost is much needed for the brand, which was overtaken in global sales for the first time by Chinese smartphone giant Huawei, according to Counterpoint Research's June and July figures for 2017.

But not all currency experts agree that "over-valuation" of the Australian dollar is to blame for the inflated price of iPhones.

"The report is a measure of purchasing power parity, where one good is priced relative to another, but when it comes to things like the iPhone, where it's made and the cost of electronic goods more broadly, they're just more expensive in Australia then they are in the U.S," IG chief market strategist Chris Weston explained.

"It's a structural issue, I don't think it's reflective of exchange rates or other forces, it's just a reflection that electronic goods in America have been cheaper for a long time."

"We're a massive island in the middle of nowhere, they can charge us whatever they like and we will end up paying it."

Although he disagreed with the iPhone index report's evaluation of Australia's currency, Weston admitted the information could still be useful for Aussie consumers.

"From a trading perspective I wouldn't give it any consideration whatsoever and from a monetary policy perspective I wouldn't give it any consideration either," Weston said.

"But from a view of where in the world should I buy an iPhone, then maybe."

(ASIA PACIFIC DAILY)