International Cost of Living Differences - Major Cities
In August 2018 UBS completed an update of their "Prices and Earnings" Survey - comparing prices and income levels across a number of major cities in the world. The results are summarised below, and compares the cost of living in major global cities, including rental costs. In the chart we have re-based the comparison on Sydney, rather than New York.
These figures should only be seen as broadly indicative of price differentials, for the following reasons:
1. They are very dependent upon foreign currency movements and consequently the relative strength of currencies - for that reason cost of living differentials are usually expressed together with the prevailing foreign exchange rate. The reduction in the value of the AUD post 2018, particularly in terms of the USD, will see markedly different rankings when published again in 2020.
2. The composition of the reference basket of goods and services used in the survey represents the spending habits of a three-person European family and therefore doesn't really reflect the costs for individuals or those in larger family units. These indices are difficult to put together in a constructive, balanced fashion - access to high resolution figures is really available only to large corporations through consultancies. The selection of a "European" benchmark also means that the costs of food can sometimes be exaggerated if you adapt to local norms.
3. We have a very real concern about the accuracy of the housing costs in these type of surveys, and more particularly whether they reflect expatriate, rather than local, requirements. Expatriates will choose housing with reference to certain specific amenities and concerns - proximity to international schools, (good) hospitals, airports, shopping and security - which invariably lead to (relatively) high housing costs. This comment particularly applies to many developing countries, where access to good quality housing in the "right" locations is invariably hard to acquire and expensive by any measure.