Sydney is an absolute must if you are visiting Australia, but unfortunately it’s generally more expensive than you might expect, especially when the currency is strong as it is in 2010. Hostels and hotels are of high standard, and you tend to pay an extra price for it. The backpacker neighborhood of Kings Cross might be the best place to find accommodation bargains, though it’s also more seedy than you’d probably expect.
Thanks to labor costs and high taxes, prices for food and drink are fairly high, so it takes some creativity (and self-catering) to get by on a backpacker budget in Sydney. Beer, wine, and spirits are also pricey, even when you buy them in markets, though local wines can be decent bargains when bought in large stores.
The main Sydney attractions are also quite expensive, but this is a city where much of it can be seen and appreciated from outside, especially the lovely beaches, so you can have a great time without paying high admission fees everywhere you go.