A strong Australian dollar continues to outweigh the impact of price increases on the cost of living for expats but Australian locations are no longer jumping up the ranking of the most expensive places.
Sydney is the 16th most expensive location for international assignees, according to the latest Cost of Living survey from ECA International, a leader in the development and provision of solutions for the management and assignment of employees around the world.
Just three years ago, none of the Australian locations in the survey featured in the top 60. Since then, the Australian dollar has gone from strength to strength and all Australian locations surveyed now rank in the world’s top 30 most expensive locations.
Sydney is followed by Canberra in 18th place, Adelaide in 21st place, Melbourne in 24th place, Perth in 25th place, Darwin in 27th place and Brisbane in 28th place. Although the dollar has had a mixed year in 2012 as worries over the global economic outlook have intensified, particularly with regards to ongoing growth in China, it still has a strong upward effect on cost of living, says the firm.
This has outweighed the fact that the cost of items in ECA’s representative basket of goods for Australia has barely risen over the last 12 months, compared with a year ago when they rose more than 4% on average. However, while Australian cities remain among the most expensive cities in the world this is the first time since 2008 that they have not jumped up the global rankings. In fact, Sydney, Canberra and Melbourne all fell one spot while Brisbane fell two.
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‘Despite the low price inflation being good news for locals, the strong dollar does mean that Australia remains an expensive place to live compared with many other countries around the world making it less attractive to visitors,’ said Anna Michielsen, general manager, Australia, New Zealand & Pacific for ECA International. ‘The cost of goods and services in our basket for Sydney, for example, is now almost 25% higher than the cost of the equivalent items in central London,’ she explained.
‘Overseas companies may think twice about sending expatriates here since, for many, the higher cost of living means the allowance usually provided to employees to ensure they maintain their purchasing power while on assignment has increased considerably in recent years,’ she added.
Living costs for overseas 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 two Cost of Living surveys per year, comparing a basket of consumer goods and services commonly purchased by assignees in more than 400 locations worldwide.
‘Certain living costs such as accommodation rental, utilities charges, car purchases and school fees are not included in this survey. Although such items can have a significant effect on overall cost of living, they are usually compensated for separately in expatriate packages so this data is researched and published separately,’ explained Michielsen.