Where is the most expensive country to live in for expats and which is the cheapest? Released on June 2016,Mercer’s annual Cost of Living survey answers the decisive question that aids many expats when weighing where they want to move in the world.
The report surveyed 375 cities across five continents and ranked them in 209 places by measuring the prices of over 200 items available locally like rental housing, gasoline, fast-food meals and entertainment and benchmarking them against New York.
The 2016 findings saw significant changes in cost of living with China gaining on the leaderboard, EU countries welcoming slight improvements following the euro’s recovery and American cities continuing their upward ascent due to a strong US dollar.
Switzerland and China among the costliest
The survey’s top 10 is now dominated by five Asian cities with Hong Kong rising to first place. Singapore maintained its fourth position while Tokyo rose to fifth and Shanghai, and Beijing stayed in the leaderboard at seventh and tenth places respectively due to a strengthening yuan.
Renters in Beijing pay an average of GBP 550 (EUR 685) on rent monthly —a staggering 130 percent of an average individual’s salary — while those residing in Hong Kong spend a hefty GBP 1345 (EUR 1665) on rent, which consumes 64 percent of their monthly paycheques, according to a recent 2016 global report by UK-based non-profit organisation Global Cities Business Alliance (GCBA).
“Big cities like Beijing are victims of their own success,” said GCBA CEO Lesley Saville in a press release. “Rapid growth has magnetised workers, but they now need to deliver enough houses so that workers enjoy living there… The wealthiest workers will always be able to afford to live in the biggest cities, but the danger is that talented workers starting their careers in many sectors will find themselves priced out.”
Switzerland keeps its uncontested spot as the most expensive country in Europe with three of its cities appearing in the top 15. In last year’s Mercer report, Zurich, Geneva and Bern experienced a steep ascension driven by the Swiss franc rocketing against the euro after an unexpected move to eliminate the currency value’s price ceiling. The franc’s recent weakening against the US dollar, however, have pushed Geneva three positions down to eighth and Bern four places to 13th. Financial centre Zurich was unaffected as it continues to claim the third spot.
Following the ceiling’s removal, prices for Swiss services and goods increased compare to other countries in Europe. According to the 2015 UBS Price and Earnings report, which analyses the prices, wages and purchasing power in 71 cites globally, Zurich and Geneva pay the highest prices in the world for a standardised basket of 122 goods and services based on the monthly consumption of a three-person European family. Residents of Zurich have to shell out USD 3,632 (EUR 3,213) while those in Geneva spend USD 3,546 (EUR 3,136.94) monthly compared to those in Kiev, the lowest recorded city, who only put in USD 1,273 (EUR 1,126) for the same amount of goods and services.
Workers in two Swiss cities, however, earned the highest relative gross salaries from all cities surveyed by the report and the strongest purchasing power in the world after Luxembourg — receiving pay around 19 times those in Nairobi, Jakarta and Kiev, which were at the bottom of the list — allowing them to overcome Switzerland’s relatively high cost of living.
Eurozone on recovery
Western European countries fared generally well in this year’s survey after facing substantial declines last year due to a weakening euro. The currency’s recent stabilisation against the US dollar has led several cities to welcome gains ranging from small to more sizeable ones from a few Mediterranean cities.
This nascent improvement is evident in the capital of EU founder the Netherlands, France and Germany, which moved up by an average of four notches with Amsterdam, Paris and Berlin now occupying the 64th, 44th and 100th spots.
Luxembourg, Madrid, Barcelona and Lisbon saw more pronounced developments in 2016 as their ranks soared between 8 to 14 positions to the 86th, 105th, 110th and 134th place in the Mercer report. Brussels exhibited the greatest progress by emerging from the 102th place to the 86th this year.
An article by Business Insider reported that the eurozone’s slow growth is expected to “grow at a slightly faster pace this year at around 1.7 percent” following a Reuters poll of European Central Bank (ECB) forecasters and economists. Unemployment in the EU has also been falling steadily to 10.5 percent in November 2015 — the lowest in more than four years — while “consumer confidence is on the rise and economic sentiment is at a more than four-year high.”
The ECB’s surprise stimulus package from March 2016 that intended to boost the Eurozone by slashing main interest rates to zero and introducing measures that encourage banks to increase their lending has alsofurther bolstered confidence in the EU economies, according to the Wall Street Journal.
The UK, however, bucked the trend with London falling from 12th to 17th and cities like Birmingham and Aberdeen slightly dipping approximately three places each to 96th and 85th place — a downward course that could be exacerbated by the country’s historic exit from the EU following the 23 June referendum.
Moscow further dipped to 67th after possessing the ninth spot in the 2014 rankings due to a combination of lower oil prices, ongoing political tensions and the depreciation of Russia’s rouble.
“Despite some marked price increases across the region, several local currencies in Europe have weakened against the US dollar which pushed a few cities down in the ranking,” ,” said Nathalie Constantin-Métral, a principal at Mercer responsible for compiling the survey ranking, in a statement. “Additionally, other factors like recent security issues, social unrest, and concern about the economic outlook have impacted the region.”
According to the 2015 UBS Price and Earnings report, financial and trade embargoes imposed by the US and Western Europe against Russia following the mid-2014 Ukrainian conflict has had a “sizeable impact on the Russian rouble, which has lost almost 42% of its value in US dollar terms since 2012.”
St. Petersburg, however, endured the sanctions’ continuing consequences by holding onto its position at 152nd while some Easter and Central European countries like Kiev, Prague, Budapest and Minsk showed signs of improvement by advancing to 176th, 124th, 165th and 204th while still remaining on the lower spectrum of Mercer’s Cost of Living index.
Rising cost of living in North America
While many European countries suffered a decline in their cost of living, the opposite trend took place in North America last year with American cities, specifically, surging dramatically in ranking due to the strengthening of the US dollar against other major currencies. New York remained the highest ranking city in the continent shy one spot from the top 10.
“Despite mild price increases overall, most cities in the US have climbed in the ranking, primarily due to a strong US dollar,”Constantin-Métral said.
Other metropolitan cities also experienced sweeping rises with San Francisco, Los Angeles and Seattle in the West Coast soaring by an average of 14 rungs to 26th, 27th and 83rd place. The cost of living ranking of Honolulu, Washington, DC and Boston each increased by another 15 places to after climbing an average of 40 spots in 2015. Among the less expensive cities in the US surveyed for expatriates were Portland at 117th and Winston Salem at 147th.
A 2015 report from Forbes warned that “inflation is lurking” in the U.S. due to several factors like plunging gasoline prices and mounting rental costs due to “rental vacancy rates [continuing] to fall across most parts of the country” and a growing amount of jobs in the economy.
In response to rising consumer prices, the American Social Security Department issued a projection last 22 June 2016 saying that social security recipients could expect a slight 0.2 percent increase in their benefits in 2017. The final percentage will be determined in fall 2016.
South Africa, one of the cheapest countries to live in
Crippling living costs and high price tags of goods for expats ranked several African cities like Luanda in Angola, Kinshasa in the Democratic Republic of Congo, N’Djamena in Chad, and Lagos in Nigeria among top 15 most expensive cities to live in the world. This trend rings true across most cities in the African continent except for South Africa. Reflective of the weakening South African rand, Cape Town fell to the position of 208th in the survey while Johannessburg also slid to 205th.
In a 2016 report by GoBankingRates, South Africa was named as the cheapest country in the world to live and retire in due to a significantly high purchasing power and low prices on consumer goods and services. Due to being the world’s largest platinum, gold and chromium producer, South Africa residents have a local purchasing power 26.9 percent higher than individuals living in New York. They also enjoy price tags of rent, groceries and local goods and services that are 87.5 percent, 71 percent and 65.8 percent cheaper than their New York counterparts.
The two South African cities of Cape Town and Johannesburg are joined at the bottom by Blantyre in Malawi, Bishkek in Kyrgyzstan and Windhoek in Namibia as the 206th, 207th and 209th least expensive cities for expatriates.
Expatica
Originally published by Expatica
