The central bank has calculated how much more expensive houses are, the closer you are to the city centre or the waterfront.

The answer is that proximity to the CBD and waterfront can boost house prices by 40 per cent to 70 per cent, based on the median house prices in Australia’s five biggest capital cities.

The Reserve Bank of Australia’s (RBA) Urban Structure and Housing Prices report also found that the waterfront effect is largest in Sydney and Perth, adding around 50 per cent to prices.

The report defined waterfront suburbs as those adjacent to the ocean, harbours or a river with significant width.

Brisbane and Adelaide have the smallest differences between house prices near the water and those that aren’t.

The RBA report also calculated that house prices in suburbs closer to the city centre had risen 1.3 per cent faster than outer suburbs between the years 1992/93 and 2009/10.

The report found that house prices in the five largest capital cities of Sydney, Melbourne, Brisbane, Perth and Adelaide rose one per cent faster than those outside the big centres.

The RBA’s report said the rate of price rises were higher in the cities because of demand for land in the inner city and waterfront suburbs, rather than the price of the actual house itself.

The report found that houses were more expensive in the largest capital cities of Sydney and Melbourne.

The RBA said an additional reason for the higher prices in Australia’s two biggest cities could be the larger employment opportunities and more central business districts within those cities compared with the smaller cities.