After a brief respite, Tokyo has now returned to the top spot in a list of the most expensive cities in the world, while cities throughout Europe have become cheaper as a result of the eurozone crisis.
According to the annual cost of living report published by the Mercer group, the yen’s rise against the dollar has significantly pushed up the cost of living for staff and firms that are paid in other currencies, making Tokyo the most expensive city in the world in which to live.
Meanwhile, Paris, Rome and Amsterdam have all slid down the rankings as a result of what Mercer called a “considerable weakening” of the euro and reduced costs for overseas firms. Falling incomes and rising unemployment as a result of prolonged recession in this part of the world has led to depressed prices. In Paris, for example, the cost of renting a two-bedroom luxury property has fallen by 3% over the last year, with similar rent deductions being observed in Rome, Berlin and Madrid. However, the biggest impact on prices in the eurozone has been the exchange rate, with the value of the euro falling 16% since its peak in May. This translates into a 16% discount for employees who are paid in an alternative currency. Falls in the cost of living were observed in many European cities, including Oslo (15th to 18th), London (18th to 25th), Paris (27th to 37th). Similarly, Milan, Rome, Stockholm, Vienna, Amsterdam, Brussels and Dublin all lost between seven to 14 places. Athens tumbled 24 places to position 77th.
“Despite some marked price increases across the region in the first half of last year and widespread increases in VAT charges, most European cities dropped in the ranking,” said Nathalie Constantin-Metral, who compiled the data. “This is mainly due to the unstable economic situation across Europe, which has led to the depreciation of most local currencies against the dollar.”
Karachi in Pakistan was revealed to be the least expensive city in the world; expats living there can expect costs that are three times cheaper than those expats living in Japan would face. Karachi is followed by Islamabad, Pakistan; Managua, Nicaragua; Bishkek, Kyrgyzstan; La Paz, Bolivia; Tunis; and Kolkata, India in the cost of living stakes according to Mercer.
Like Japan, Australia is also getting costlier. Six Australian major cities were named among the top 30 most expensive cities in the world in which to live because of the stronger Australian dollar, according to Mercer. Sydney ranked 11th and Melbourne 15th, whereas Perth and Canberra both jumped 11 places to numbers 19 and 23. Brisbane rose by seven places to take 24th position while Adelaide moved up 19 places to 27th.
“Demand for rental properties has also increased significantly in all the Australian cities we rank,” Mercer principal Nathalie Constantin-Metral said.
“Coupled with very limited availability, the result has been very tight markets and increased prices.”
The report, which is published on an annual basis and is aimed at helping companies to put together appropriate relocation packages for the employees that they relocate overseas, compares the cost of 200 items across several categories including transport, clothing, food, household goods and entertainment in 214 cities throughout the world, using New York as the base cost.
“Recent world events, including economic and political upheavals, have affected the rankings for many regions through currency fluctuations, inflation, and volatility in accommodation prices,” Mercer said today in its annual Worldwide Cost of Living Survey.