Asian Cities Becoming More Expensive

Wage growth and economic optimism are making Asian cities among the most expensive places in the world to live in, according to the latest findings of The Economist Intelligence Unit's Worldwide Cost of Living Survey, a relocation tool that compares the cost of living between 131 cities worldwide using New York as a base city.

 

Tokyo is once again the world's most expensive city, a title that it has held for 14 of the last 20 years.

 

Although Tokyo's position is little surprise, the increased prominence of Asian cities among the most expensive is becoming noticeable.

 

"Asian cities have been rising on the back of wage growth and economic optimism. This means that over half of the 20 most expensive cities now hail from Asia and Australasia," comments Jon Copestake, editor of the report which looks at over 400 individual prices.

 

In particular, Australian cities have been rising quickly. The current survey sees Sydney rated as third and Melbourne as fifth most expensive cities surveyed. They are joined in the top ten by Singapore and the Venezuelan city of Caracas.

 

Although the presence of the Venezuelan capital in the top ten may come as a surprise it is entirely due to artificially high exchange rate controls; if alternative parallel exchange rates were applied, Caracas would be on a par with the cheapest cities surveyed.

 

The bottom ranked cities have a familiar feel, both in terms of geography and consistency. While Asia is home to over half of the world's 20 priciest cities, it is also home to six of the ten cheapest.

 

Five of the bottom ten (and six of the bottom eleven) cities hail from the Indian subcontinent (defined as India, Pakistan, Bangladesh, Nepal and Sri Lanka). Mumbai and Karachi are the joint cheapest locations in the survey, with indices of just 44 when New York is set as 100.

 

Austerity makes Europe cheaper
Europe has long been home to some of the world's most expensive places. However economic fears and growth in emerging markets have seen European cities become relatively cheaper, according to the survey.

 

Although Oslo, Zurich, Paris and Geneva remain among the ten most expensive cities, fears over the single currency have pushed the index of Eurozone cities down by an average of over 13 percentage points over the last 12 months.

 

Movement has been much more modest in London and Manchester, the UK cities included in the survey.

 

In the last 12 months London has moved up one place to 16th in the ranking while Manchester rose 6 places to 47th place. Despite these recent rises both cities represent relative bargains compared to five years ago, when London was the third most expensive city and Manchester was 28th.

 

Zurich rose to become the world's costliest city last year, thanks to capital flight into Switzerland, but the city has seen an equally dramatic decline this year. A relative cost of living decline of 39 percentage points for Zurich was the steepest index fall in the survey, pushing Zurich down to seventh.

 

The fall in Zurich's cost of living meant that, despite seeing an index decline of 14 percentage points itself, Tokyo is once again the world's most expensive city, a title that it has held for 14 of the last 20 years.

 

"The cost of living in Europe has seen relative declines thanks to economic austerity and currency fears," says Copestake.

 

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