So the born-and-bred Sydneysiders are moving 550 kilometres to  Albury.

"We could afford to buy in the Sydney market but we don't want to over extend. We kind of want to have a bit of everything," Mrs  Prince, 32, said.

The couple, who each earn more than Australia's average income of  $58,700, are now building a four-bedroom house on 900 square metres, a project they expect to cost less than $400,000.

Where they live in Merrylands, the median price for houses is  about $690,000 and $410,000 for units. The median weekly rent for a three-bedroom property in the area is around the $480 mark, or $25,400 annually.

The mounting pressures of house prices – now at historic highs compared to incomes – is forcing many Sydney families to consider leaving the harbour city.

The average NSW home price today is  almost five times the average NSW household income, up from just two times average income as recently as the 1980s, a Barclays Bank analysis shows.

Households could end up paying a $150,000 lifetime penalty for choosing to live in Sydney rather than Melbourne. It cost $72,914 to live in Sydney two years ago, a study by the National Centre for Social and Economic Modelling found, compared to $70,193 in Melbourne.

While food has historically been the biggest item in household expenses, housing costs in rent and mortgages have streamed ahead to become the biggest source of household financial stress.

Economists blame chronic under supply of housing and Sydney's cramped geography for the house price boom which has driven prices to stratospheric highs.

Demographer Bernard Salt has warned that Melbourne will overtake Sydney for population by 2030 if nothing is done to address Sydney's affordability crisis.

Sydney is adding 80,000 people per year, above its historic average of 55,000. "There's more people coming to Sydney than ever before," Salt says.

But even more people are choosing Melbourne, which is adding 95,000 per year.

"Over the 100 years from Federation to the Olympics, Sydney added more people than Melbourne. Since the Olympics, Melbourne has added more people every year."

As Sydney reaches a crunch point, many families are taking matters into their own hands and leaving the harbour city.

Salt says it's not hard to see why.

"In Melbourne, you can get a three-bedroom brick veneer home 35 kilometres west in Werribee for $360,000 or $370,000. But in Sydney's Kellyville, 40 kilometres out of the city, you're paying $450,000. Melbourne delivers better affordability than Sydney and over the last decade-and-a-half, people have voted with their feet and increasingly chosen Melbourne over Sydney."

This exodus is reshaping Sydney's social fabric, Salt warns.

"It's almost like the Manhattan effect, you only attract rich people on to the Manhattan island, and the rest live out in Brooklyn etc."

Sydney is increasingly segregated between the inner city, home to a global workforce, and its sprawling suburbs.

"Should a global city like Sydney really offer a place for everyone? That's a social question," says Salt.

Some have suggested Sydney should decouple from the rest of the country, with interest rates set higher to stop the nascent property bubble.

But the chief economist at Bank of America Merrill Lynch, Saul Eslake, dismisses the idea as "nonsense".

"You can't do it any more than you could have different interest rates for Greece and Germany." Sure, Australia could devolve into autonomous countries with separate economies. "Yes, but do you want fluctuating exchange rates across Australia?"

And where would you set Sydney rates? Higher Sydney interest rates, designed to burst a bubble, would only dampen other parts of the economy necessary for jobs growth. Lower Sydney rates, designed to help out more indebted households, would only add to housing demand and price pressure.

It won't be so easy to solve Sydney's affordability crisis.

Australia's top economic bureaucrat, Treasury Secretary John Fraser, took the extraordinary step last week of warning that Sydney house prices are "unequivocally" in a bubble.

But it's not a term that most economists like.

"I don't use the term 'bubble'," says Eslake. "There's no definition," and it tends to make people hysterical, he says. The furthest Eslake will go is to say: "Residential property price valuations in Sydney are stretched."

A recent analysis by an economist at Barclays Bank, Kieran Davies, found house prices were an issue not just in Sydney, but across the country.

In a note to clients in February, Davies warned house prices nationally were "extraordinarily stretched". "We calculate that prices are out of line with incomes in almost every state," he wrote. Valuations were likely to enter  "uncharted territory" on the back of lower interest rates.

Nationally, average home prices were 4.8 times average household incomes, Davies found, matching record highs seen in 2003 and 2010. The national average  house price of $586,000 compared with annual income per household of $122,000.

In NSW, the ratio is the highest in the country at 5.6 times annual income, and on track to match the all time high of 6.1, reached in 2003. "This high ratio mainly reflects high house price growth given NSW incomes are only modestly higher than the national average," Davies found. NSW's average household income is $127,000, just a little above the national average.

Victorian prices are the second highest, at 5.3 times incomes, followed by Western Australia at 4.1, Queensland at 3.9, South Australia at 3.8 and Tasmania at 3.3.

Nationally, house prices have increased nearly 50 per cent since before the global financial crisis hit in 2007. This is in contrast to the rest of the world. In the UK, prices are up 17 per cent. But in many countries, prices remain lower, 9 per cent lower in the United States, 2 per cent lower across the euro area and 17 per cent lower in Japan.

Kieran Davies says prices are in a bubble, but not one that's about to pop.

"I think there is a bubble, but I think house prices have been decoupled from increases in rents for a long time."

"I just can't see anything that will cause a correction in the short term, particularly when the RBA has been cutting rates. If any asset was going to crash it should have been during the GFC."

While Sydney prices are expensive, the recent strong growth in prices is catch up after several years of subdued price gains.

According to Davies, Sydney prices have usually traded been 1.3 to 1.4 times the national average. This ratio fell to just 1.1 during the GFC and is still only back to 1.2: "This suggests to us that further Sydney outperformance is likely."

According to Eslake, these measures of affordability prove that higher wages in Sydney simply don't make up for the high cost of living.

"If I wanted to live in a city whose housing I can't afford, I'd live in London or New York, not Sydney," the Tasmania-based economist says.

And those waiting for prices to crash will be disappointed. High prices are the result of policy design and geography.

"The main reason why house prices are so high compared to incomes is Bob Carr," says Eslake. "Carr's 'Sydney is full' strategy, which involved basically locking up large amounts of land that could have been used to increase the supply of new housing … is largely responsible for the escalation in house prices. Sydney's geography doesn't help. It looks large, but there's an awful lot of water in it, and national parks, which makes it harder to add to housing supply. But Bob Carr made it a hell of a lot worse."

Melbourne-based Salt agrees Sydney's innate geography, with its CBD to the east, rather than in the centre like Melbourne, makes affordability an issue.

But as Bob Carr shut the doors, former Victorian Premier Jeff Kennett unlocked vast tracts of previous basalt plains to new housing in the 1990s, serviced by new ring roads.

Melbournites, as a result, had a more positive view of suburbia, being home to the urban legends of Dame Edna Everage, Kath and Kim and The Castle.

Housing affordability can help to foster a sense of inclusiveness, which is missing in Sydney today.

"In Sydney, it's way out west, it's another place."

"Do the people of Western Sydney feel they have a chance at prosperity and progress in Sydney, or do they feel that it's all too hard, there's them and there's us?"

CommSec economist Craig James has some sympathy for Sydneysiders suffering the burden of higher house prices, but points to other areas of price relief that often go unnoticed.

"It's true that house purchase has become less affordable, but you don't hear people fretting about the cost of food or clothing or cars. Affordability there is either the best it has ever been, or the best in decades. Clearly people don't fret about the cost of the shirt on their back, they know it's cheap as chips."

While Darwin residents face higher prices for food and petrol due to transport costs, there was not much in it between Sydney and Melbourne on petrol and food.

The real killer for affordability is housing, because we've chosen to do it that way.

According to James, any savings on other consumer items have been ploughed back into housing. It's a choice we, as a society, have made to spend more of our income on housing. "People have said, great, we've got a bit extra and we're going to put that into where we live."

It's one of the reasons James does not believe Sydney prices are in a bubble. "No, these things just go in cycles," he says. "Things going a little bit crazy and then settle down," as they did in the 1980s and in the early 2000s.

Sydney prices have risen just 4.4 per cent a year on average over the past decade, he observes.

And Sydney is on the cusp  of a new housing supply boom, as major apartment developments in Harold Park, Waterloo, Green Square and Barangaroo come on line.

Eslake warns new supply could be significant enough to affect prices in a few years. Nationally, Australians are building 200,000 new dwellings a year. "That's an awful lot," says Eslake, and could be enough, in a few years, to entirely eliminate Australia's housing shortage.

"You're now starting to get a supply response."

Enough to burst a bubble?

No, says Eslake. Increased supply may bring some price relief, but there is no trigger on the horizon for the rush of forced home sales it would take to  provoke a large house price slide. Australians will go to great lengths to avoid such a fate, says Eslake.

"There aren't many things in Australia that carry deep shame, we're an easygoing nation, but defaulting on your homeland is one of them. We will go to great lengths to avoid that."

"If interest rates were to go up a lot … households would start saving more in other areas and paying off their mortgages more quickly."

For the Prince family, it was time to buy a home.

Mrs Prince, an executive assistant on maternity leave, and Mr Prince, who runs a land clearing business, have spent the past decade renting together in Sydney.

"We're moving to the outskirts of Albury and within 10 minutes we can have the kids at school, we can be in the CBD and we can be at work. The only thing you can't find in Albury is the beach," Mrs Prince said.

Now with a four-year-old and a seven-month-old baby, the couple wanted to buy their own home.

It was not a single factor, but many, that prompted them to  make the life-changing decision to leave the harbour city.

They browsed houses in Sydney for a few years but the more affordable options – around the Hawkesbury and Blue Mountains – came with long commutes to the CBD.

They were concerned they would have to work long hours and would not be able to afford regular holidays if they tried to buy in the competitive Sydney market.

"Over the last few years we were always looking to see what's out there and where the growth is at," Mrs Prince said.

"If we can lower our mortgage by moving to the country we can still send our kids to great schools and we can still go to the snow every year."

On top of that, they wanted to escape the fast pace of city life and had fallen in love with Albury and the idea of living near the ski slopes.

"Sydney is changing, we want to bring our kids up the way we were raised," Mrs Prince said. "That simplicity when we were in Sydney 30 years ago is going."

Outside of rent, Mrs Prince said the couple's biggest household expenditure was on bills for gas, electricity, water and phones. The lower cost of living in Albury – including access to more affordable childcare – was an additional bonus.

The Princes estimate that they will spend 30 per cent less on fuel and save $140 in parking every month once they have made the move. They also believe they'll slash their commuting time – it currently takes Mrs Prince 30 minutes to get to work and Mr Prince an hour.

Evocities, a campaign by seven regional cities in NSW to encourage capital city residents to relocate, is helping Mr Prince to move his business to Albury.

A spokeswoman said that, since the initiative started in 2010,  more than 2000 households had been relocated to one of the cities and they had received 2700 inquiries.

Mrs Prince said she saw moving to Albury as a "stepping stone" into the property market. The couple hope to buy a bigger house, on a bigger property in the near future. But first they plan to move into their new home in the next year.

"For us, Sydney is not pushing us out because of its prices. We want a bit of everything and [Albury] just kind of ticks all the boxes for us," Mrs Prince said.

THE COST OF LIVING

Childcare costs are biting too. A survey by NATSEM last year found some Sydneysiders are paying $170 a day for childcare in inner areas. In Mosman, childcare costs absorb 9.3 per cent of disposable incomes, the highest cost in the country after the Kimberley mining region where families pay 11.4 per cent of their income.

Sydney inner city and Melbourne city are on par, with childcare costs absorbing 8.3 per cent of disposable income. Childcare is cheaper in the suburbs, at just 4.2 per cent of income in Fairfield and 4.5 per cent in Campbelltown. Inner Brisbane is more affordable too, at 7.1 per cent.

At the bowser, Sydney motorists pay slightly more than the national average, according to CommSec Data. In a weekly survey conducted last month, the average unleaded petrol price was 138.9 cents per litre in Sydney, versus 137 cents in Melbourne and the national average of 138.3 cents.

Canberrans paid the most at the bowser, 144.23 cents, followed by Hobart, 142.5 cent and Brisbane motorists 142.2 cents.

Adelaide remains the most affordable city to drive in at 132.9 cents.

Food is one area where it pays to live in the city.

Sydney prices are traditionally lower than regional areas thanks to lower transport costs and greater competition.

But prices have been subdued across the country thanks to heavy discounting by the big grocers.

According to Woolworths data, food prices rose just 1.3 per cent over the five years ended March 2014, compared to inflation at 2.6 per cent, easing this source of cost of living pressure.