Sydney rockets up the list of the world’s most expensive cities

Sydney is now among the top 20 most expensive cities worldwide according to ECA International, the world’s leader in the development and provision of solutions for the management and assignment of employees around the world.

 

Food price increases of 5.2% in Sydney coupled with the impact of the strong Australian dollar have seen the city shoot up ECA’s ranking looking at cost of living around the world for international assignees. Sydney is now more expensive for international assignees than Paris, Manhattan and Hong Kong as well as London.  A year ago, goods and services in Sydney were 3% more expensive than when purchased in Hong Kong. Now they are 17% more costly.

 

"The strong Australian dollar which hit parity with the US dollar last November, and has strengthened further since, has been a significant factor behind the continued rise of Australian locations up the global ranking," said Anna Michielsen, General Manager, Australia, New Zealand & Pacific for ECA International.

 

"While price increases have impacted on the purchasing power of Australians at home, international assignees coming into the country have seen their purchasing power affected by the stronger Australian dollar.   For businesses, the progressively stronger dollar means that companies sending people to Australia from many locations will need to continue to pay or even increase allowances in order for employees to maintain their purchasing power while on assignment.  Conversely, many locations previously considered expensive for international assignees moving overseas from Australia now seem surprisingly reasonable in terms of cost of living."

 

Sydney has overtaken Canberra, which has jumped from 26th to 18th position year-on-year, as the most expensive Australian city.  Sydney and Canberra are followed by Brisbane (21st), Melbourne (25th), Perth (26th) and Adelaide (28th) - all these major Australian cities are now in the global top 30.

 

Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages. To help multinational companies calculate assignment salaries, ECA carries out a Cost of Living Survey twice a year comparing a basket of consumer goods and services commonly purchased by assignees in 400 locations worldwide.

 

Asia Pacific Regional overview – price inflation vs. currency movements

Price inflation is being witnessed around the world as the cost of food, oil and other commodities rise. In Asia Pacific, the prices of ECA’s basket of goods and services in local currencies have increased by around 4.8% on average. Prices have increased on average by 2.7% overall in Australia. Papua New Guinea (9.7%), Bangladesh (7%), Vietnam (6.2%), Indonesia (5.8%) and Hong Kong (5.5%) are among the Asia Pacific economies that have seen the highest rates of price inflation.

 

However, currency movements still have the biggest influence on rankings.  In Asia Pacific the Australian dollar appreciated most over the twelve months between surveys, followed by the New Zealand dollar.

 

In some cases, the combination of both strong currencies and inflation have contributed to a country’s rise up the ranking.  As well as Sydney this is happening in Singapore, Ulaan Baatar, Bangkok and Kuala Lumpur – these locations have risen by 32, 23, 20 and 16 places respectively.  Other locations have fallen in the ranking despite major increases in local prices. Hong Kong and Vietnam are examples of this – the weakening of their currencies has more than counterbalanced the impact of price inflation.

 

Tokyo remains the most expensive location in Asia Pacific – and globally – for international assignees. Although Japan is the only Asian country surveyed where the actual cost of goods in the ECA basket of goods has fallen, a strong currency and already higher costs for goods mean that cost of living for assignees is significantly more expensive than in other locations in the top ten.

 

Little change has been seen in China but Hong Kong’s drop in the ranking from  33rd to 45th means it is currently only marginally more expensive for international assignees than Beijing, ranked 46th and Shanghai in 47th position. Xi’an is the cheapest mainland Chinese city featured in the survey, ranked 126 places behind Beijing in 172nd.

 

Hanoi is the Asian location that has fallen most in the ranking from 200 to 224 while Karachi (at 240) remains the cheapest location in Asia and globally.

 

The Norwegian capital Oslo remains the most expensive location surveyed in Europe and the 2nd most expensive globally. It is followed by Stavanger (4th globally) and the Swiss city Zurich (6th).

 

Of the European locations surveyed cost of living has increased the most in Swiss locations. In Switzerland, where inflation is low, it is the strong Swiss franc that has contributed to pushing Zurich up to 6th position globally from 10th.

 

With the weakening of the euro against major currencies between surveys, many eurozone locations have fallen down the ranking significantly. A year ago goods and services commonly purchased by expatriates were almost 9% more expensive in Paris than in Sydney. Now the same items are 5% more expensive when bought in Sydney than in the French capital largely due to the euro depreciating against the Australian dollar.

 

"On-going economic troubles in the eurozone region have affected the single currency," says Anna Michielsen. "As a result many locations where the Euro is used have dropped down the rankings. This continues the trend we have seen in recent surveys, whereby more and more companies are introducing or increasing cost of living allowances when assigning staff from Europe to Asia Pacific."

 

Caracas (15th) is the most expensive location in the region for international assignees - a result of rampant inflation. The Venezuelan capital is followed by Brazilian locations Rio de Janeiro (23rd) and Sao Paolo (27th).

 

In North America, Vancouver (37th) is the most expensive location for assignees, followed by Ottawa (40th), Toronto (42nd) and Manhattan (44th).

 

Luanda, Angola, ranked 7th globally, is the most expensive location for international assignees in Africa followed by Libreville (Gabon, 19th) and Kinshasa (Democratic Republic of Congo, 24th). While these locations are among some of the most expensive surveyed, Africa is also home to some of the least expensive locations, with Maseru (Lesotho), Alexandria (Egypt) and Durban (South Africa) ranked 237th, 235th and 225th respectively.

 

In the Middle East, Tel Aviv, ranked 29th globally is the most expensive location surveyed while Dubai is 175th. Jeddah, 234th is the least expensive.

 

 

Figures used in this release were taken from ECA’s Cost of Living Survey.

 

ECA International’s cost of living indices are calculated based upon surveys carried out annually in March and September using a basket of day-to-day goods and services.  The data used above refers to year on year movements between ECA’s March 2011 and 2010 surveys.

 

The data is used by ECA clients to calculate cost of living allowances for assignees. The survey covers:

Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables

Basic: Drink and tobacco; miscellaneous goods; services

General: Clothing; electrical goods; motoring; meals out

 

Certain living costs such as accommodation, utilities (electricity, gas, water costs), car purchase and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.

 

This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons, and different levels of shopping efficiency.

 

ECA is the world’s leader in the development and provision of solutions for the management and assignment of employees around the world. Delivering data, expertise, systems and support in formats which suit its clients, ECA’s offer includes a complete 'out-source' package of calculations, advice and services for companies with little international assignment management experience or resource; subscriptions to comprehensive online information and software systems for companies with larger requirements; and custom policy and system development projects for companies who manage thousands of international assignees around the world.