Once again Sydney has again been named Australia’s most expensive city in terms of cost of living.
This year Sydney has been ranked the seventh most expensive city in the world when the Economist Intelligence Unit ranked 130 cities for cost of living Last year it came in in sixth place.
“The cost of living in Sydney is now almost 50 per cent higher than that of global business centre New York – while a decade ago Sydney was more than 25 per cent cheaper than New York,” said Worldwide Cost of Living report editor Jon Copestake reported in the Sydney Morning Herald.
“The cost of a loaf of bread in Sydney has almost doubled in the past decade in US dollar terms, while petrol prices have risen threefold and rice prices have almost quadrupled,” Mr Copestake said.
What about Melbourne?
I know I’m biased, but it’s not just me that thinks Melbourne is the world’s most liveable city.
Melbourne won that title according to the Economist Intelligence Unit’s Global Liveability Ranking.
However the privilege of living in Melbourne also comes at a cost. Melbourne ranked the eighth most expensive city in the world
What do they measure?
The cost of living survey compares hundreds of prices across 160 products and services, including food, clothing, rent, transport, utility bills and recreational costs.
The survey has been carried out for 30 years and uses New York as the base city for comparison.
Rankings for other Australian cities include Perth 12, Brisbane 13 and Adelaide 17.
“Exchange rates have been the greatest influence for the Australian cost of living, with the Australian dollar seeing its value relative to the US dollar double in a decade, although local price inflation, especially last year, has also played a part,” Mr Copestake said.
The 10 most expensive cities are:
- Zurich (Switzerland)
- Tokyo (Japan)
- Geneva (Switzerland)
- Osaka Kobe (Japan)
- Oslo (Norway)
- Paris (France)
- Sydney (Australia)
- Melbourne (Australia)
- Frankfurt (Germany)
The 10 least expensive cities are:
- Muscat (Oman)
- Dhaka (Bangladesh)
- Algiers (Algeria)
- Kathmandu (Nepal)
- Panama City (Panama)
- Jeddah (Saudi Arabia)
- New Delhi (India)
- Tehran (Iran)
- Mumbai (India)
- Karachi (Pakistan)
I know where I’d rather live!
What does all this mean?
In a recent update Commsec Chief Economist Craig James commented on these findings as follows:
The fact is that Australian cities have climbed the ranks of expensive places to live because the Aussie dollar has soared.
And that makes sense because surveys of this type need to have a common base, and that base is the US dollar. So it should come as a surprise that Australian and European cities have supposedly become more expensive and US cities have become less expensive.
But in practical terms surveys of this type are next to useless, unless of course you are a US citizen wanting to buy a house in Australia. And if you are a foreign tourist visiting Australia you also probably recognise that your currency doesn’t stretch as far as it did three, five or 10 years ago.
However, if you are an Australian citizen, the cost of living hasn’t magically soared over the past few years. Some items make have become more expensive, but others have become less expensive.
That’s why we have a consumer price index to measure these changes. And the latest figures show that the underlying rate of inflation is around 2.5 per cent – exactly where the Reserve Bank wants it.
The other important point is that if you want to get an idea of how expensive it is to live in a city, you have to compare wages with prices. Because the most important concept is affordability.
And the important point here in Australia is that affordability has continued to improve for a raft of items.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.