Australian cities less expensive for foreigners, annual living survey shows

by Ray Clancy on July 11, 2014

in Australia, Money, Business and Finance

Sydney has been knocked off a list of the world’s 10 most expensive cities with the weakening Australian dollar touted as the main reason.

The city has fallen from ninth most expensive to 26th in the annual cost of living survey conducted by Mercers, which covers 211 cities across five continents and measures costs including housing, transportation, food, clothing, household goods and entertainment.

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Sydney has dropped to 26th place in the cost of living index for expats

Other Australian cities have also been placed further down the 2014 list. Melbourne has dropped 17 places to 33, while Perth fell 19 spots to 37 and Brisbane has dropped outside the top 50.

Garry Adams, leader of Mercer’s Talent business, said a softening of the dollar against the US currency was the main reason. Since July 2010, the dollar has fallen 14.6% to US94.06¢.

According to Adams, it means Australia is more competitive globally and living in Sydney, for example, will be seen as being less expensive for expats and foreign workers. But it does not mean Australian cities have become more affordable for Australians.

‘Compared to last year, where Sydney sat within the top 10 most expensive cities globally, we were looking at ensuring salaries adequately reflected the difference in cost of living to an employee’s home country to attract and retain talent,’ explained Adams.

‘Now, we’re provided with a lot more flexibility in setting salaries and attracting employees from the global talent pool, knowing the expat dollar will go a lot further,’ he added.

Adams said the fall in rankings could also make Australian cities more appealing for companies to use as headquarters for their Asia and Pacific operations. ‘The drop in costs means Australian cities become even more attractive as a location for global assignments,’ he added.

In the Asia Pacific region as a whole, a number of Chinese cities have jumped in rankings. Shanghai has gone up three places to enter the top 10 after being ranked 14th last year. Beijing was next, at 11th, Shenzhen went up 12 spots to 17th and Guangzhou 11 places to 24th.

Adams said this is due to currency fluctuations. For example, the Chinese Yuan has rallied more than 10% against the US dollar since 2010.

‘The strengthening of the Chinese Yuan and currencies in western Europe against the US dollar has also seen countries in these regions become more expensive, and driven Australian and New Zealand cities down the list,’ he pointed out.

Luanda, the capital of Angola, maintained its position as the world’s most expensive city for expats, while N’Djamena in Chad came second. In third place is Hong Kong followed by Singapore, Zurich, Geneva, Tokyo, Bern and Moscow.

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