Sydney and Melbourne in top eight most expensive cities in the world for travellers
Sydney and Melbourne have each moved down one place on the Worldwide Cost of Living Survey, now ranked seventh and eighth respectively, just below Oslo and Paris.
The strong Australian dollar has kept the Australians high on the list, which is topped by Zurich, according to the The Economist Intelligence Unit Worldwide Cost of Living 2011 report.
“Local inflation in mature markets always has far less influence on the relative cost of living than the currency movements of the countries in question. This also explains the recent presence of Australian cities like Sydney and Melbourne in the 10 most expensive locations as last year saw the Australian dollar pass parity with the US dollar from holding half that value a decade ago,” the report said.
As the report measures things in US dollars and doesn’t take into account local salaries, the report is used to calculate the cost of living for expatriates rather than the cost for locals.
“[The report is used to] calculate cost-of-living allowances and build compensation packages for expatriates and business travellers.”
Just three years ago, Sydney and Melbourne were ranked 32nd and 38th respectively.
According to the report, the cost of a bag of rice has increased 25% in Sydney and 34% Melbourne since last year, while petrol increased 40% in both Sydney and Melbourne. Bread went down 35% in Melbourne and up 40% in Sydney.
The top end of the list has been increasingly populated by Asian cities.
“Singapore’s presence in the top 10 highlights a shift away from western Europe towards Asian hubs. Cities from the Asia Pacific region (including Australasia) now make up half the ten most expensive.”
“That said, western Europe still accounts for 24 of the most expensive cities in the top 50, with 14 hailing from Asia.”
Some traditional European hubs have weathered the eurozone crisis, with Frankfurt and Paris staying in the top 10.
Zurich surged four places to the top of the list due to currency investors moving away from the Euro and into the Swiss Franc, according to the report.
“Investors looking for a haven currency outside the beleaguered Eurozone have invested heavily in the Swiss Franc, prompting an unprecedented move by the Swiss government to peg the Swiss Franc to the Euro to keep the currency competitive.”
Karachi was rated the world’s cheapest city for expatriates, closely followed by Mumbai and Tehran.
India held three places in the ten cheapest cities, showing why it has been such a target of labour outsourcing the report says.
The presence of many Middle Eastern cities in the 10 cheapest was due to price controls and the pegging of currencies to the US dollar.
The presence of Asian cities at the bottom end of the list had a more structural basis, with cheap labour and land costs making India and Pakistan incredibly attractive to those bargain-hungry visitors or investors willing to brave some of the security risks that accompany such low prices, especially in Pakistan.