The home team claimed the four remaining wickets in just under an hour on the final morning in Adelaide and are now just one victory away from winning back the famous urn after three consecutive series defeats.
It was a second emphatic defeat for England after they lost the first Test in Brisbane by 381 runs and the tourists must regroup before the third match of the series, which starts in Perth on Friday. England have only won once in 12 Tests on the traditionally pacy WACA pitch.
But he added: "I think we have to be realistic. That's our second Test win in the past 12 months -- certainly not a record we're proud of.
"There's a lot of work for us to do to get back to being the number one team in the world and that's our goal."
England captain Alastair Cook admitted his side lost the game on the first day when they were guilty of several dropped catches, allowing Australia to pile up an imposing 570 for nine declared.
Cook said England's first innings total of 172 was not good enough.
"You don't get too many chances on good wickets and we had the opportunity then and we didn't take it. I thought that was the main difference. Australia took their chances very well," he said.
"It's been a tough five days and we've got to look at ourselves, look at our performance and come back stronger," Cook added.
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