Australian & New Zealand cities fall in Mercer’s Cost of Living Survey

Australian and New Zealand cities fall dramatically in Mercer’s 24th annual Cost of Living Survey

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Australian and New Zealand cities fall dramatically in Mercer’s 24th annual Cost of Living Survey

  • 26 June 2018
  • Australia, Melbourne
  • Australian and New Zealand cities could become top choice for expats in AsiaPac
  • Asian, European, and African cities most expensive locations for employees working abroad
  • Sydney moves from 24th place in 2017, to now ranking 29th
  • Auckland jumps 20 places, from 61 to 81
  • Multinationals prepare for the Future of Work with focus on mobile talent 

As a result of the digital era, aging populations, skills shortages, and unpredictable political and economic contexts, the landscape of global business is changing as are jobs that are critical for the future of work. Multinationals are embracing this transformation by focusing on mobile talent and assessing the cost of expatriate packages for their international assignees. According to Mercer’s 24th annual Cost of Living Survey, factors like instability of housing markets, low inflation, and fluctuating prices for goods and services are impacting the cost of doing business in various cities around the world. 

Australian and New Zealand cities have all dramatically dropped in this year’s Cost of Living rankings, primarily due to the movement of other cities. Sydney was the highest ranking local city at 29, down from 24 in 2017. Melbourne (58) and Perth (61) followed, falling from 46 and 50 in 2018 respectively. In New Zealand, both Auckland (81) and Wellington (101) fell 15 and 20 places from 2017, respectively. 

“Despite volatile global markets and growing security issues, organizations continue to leverage global expansion strategies to remain competitive,” said Karla Costa, Mercer’s global Mobility Leader for Pacific. “And with six of the top ten most expensive cities in Asia - Australian and New Zealand cities are looking far more attractive for businesses to send employees on international assignments, particularly those doing business in the Asia Pacific region.” 

Ms Costa notes that as companies increasingly align their international policies with career and succession planning strategies, these latest rankings could also mean that Australia and New Zealand will become a rich breeding ground for talent for multi-national companies. 

Mercer’s survey reveals that Hong Kong has passed Luanda to take the top spot as the world’s most expensive city for expatriates. Tokyo and Zurich are in second and third positions, respectively, with Singapore in fourth, up one place from last year. This means that four out of five of the world’s most expensive cities for expatriates are now in Asia. 

“With technology advances and the importance of a globally connected workforce, deploying talent remains a key component of a multinational’s business strategy,” said Ilya Bonic, President of Mercer’s Career business. “While a mobile workforce allows organizations to achieve greater efficiency, utilize top talent, and be cost effective with international projects, volatile markets and slowing economic growth in many parts of the world require them to carefully assess expatriate remuneration packages.” 

Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Seoul (5), Luanda (6), Shanghai (7), N’Djamena (8), Beijing (9), and Bern (10). The world’s least expensive cities for expatriates are Tashkent (209), Tunis (208), and Bishkek (207). 

“Aligning workforce and mobility strategies by ensuring the right employees are in the right place is more critical than ever for multinationals as they focus on new global business models,” said Mr. Bonic. “And, properly compensating employees on international assignments is as important as it can be costly.” 

Mercer's widely recognized survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. New York City is used as the base city for all comparisons, and currency movements are measured against the US dollar. The survey includes over 375 cities throughout the world; this year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.

 

The Americas

Cities in the United States have dropped in the ranking due to a steady pickup of the European economy, which triggered a decline of the US dollar against other major currencies worldwide. New York dropped four places to rank 13, the highest-ranked city in the region. San Francisco (28) and Los Angeles (35) dropped seven and twelve places, respectively, from last year, while Chicago (51) dropped twenty places. Among other major US cities, Washington, DC (56) is down seventeen places, and both Miami (60) and Boston (70) are down nineteen spots. Portland (130) and Winston Salem, North Carolina (161) remain the least expensive US cities surveyed for expatriates. 

In South America, São Paolo (58) ranked as the costliest city despite a thirty-two place drop from last year. Santiago (69) followed as the second most expensive location. The majority of other cities in South America fell in the ranking despite price increases on goods and services in countries such as Brazil, Argentina, and Uruguay. In particular, Rio de Janeiro (99) plummeted forty-three spots. Lima (132) dropped twenty-eight places, while Bogota (168) fell fifteen places. Tegucigalpa (201) is the least expensive city in South America. Caracas in Venezuela has been excluded from the ranking due to the complex currency situation; its ranking would have varied greatly depending on the official exchange rate selected. 

Although most Canadian cities dropped in the ranking, the country’s highest-ranked city, Toronto (109), jumped ten places due to an increase in expatriate rental accommodation costs. Vancouver (109) dropped two spots, while Montreal (147) and Calgary (154) fell eighteen and eleven spots, respectively.

 

Europe, the Middle East, and Africa

Two European cities are among the top 10 list of most expensive cities. At number three in the global ranking, Zurich remains the most costly European city, followed by Bern (10). Geneva (11) is down four places from last year mainly due to a downward trend in the city’s housing market.

Overall, Western European cities have all risen in the rankings, a result of strong local currencies against the US dollar and the cost of goods and services. In particular, cities in Germany experienced some of this year’s biggest surges in the ranking, with Frankfurt (68) and Berlin (71) jumping forty-nine spots while Munich (57) climbed forty-one places. In the United Kingdom, Birmingham (128) went up nineteen places from last year, Belfast (152) jumped eighteen spots, and Aberdeen (134) climbed twelve places from its previous ranking. London jumped ten spots to rank 19. 

Other cities that jumped in the ranking include Paris (34), up twenty-eight places from last year, Rome (46), up thirty-four spots, Madrid (64), up forty-seven, and Vienna (39) up thirty-nine spots. Meanwhile, a few cities in Eastern and Central Europe, including Moscow (17), St. Petersburg (49), and Kiev (173), dropped four, fourteen, and ten spots, respectively, because of local currencies losing value against the US dollar. 

Tel Aviv (16) continues to be the most expensive city in the Middle East for expatriates, followed by Dubai (26), Abu Dhabi (40), and Riyadh (45). Cairo (188) remains the least expensive city in the region. “On the whole, most Middle Eastern cities have dropped in the ranking, due to decreases in rental accommodation costs throughout the region,” said Yvonne Traber, Global Mobility Product Solutions Leader at Mercer. 

Despite dropping off the top spot on the global list, Luanda, Angola (6) remains the highest-ranking city in Africa. N’Djamena (8) follows, rising seven places. Moving up fourteen spots, Libreville (18) is the next African city on the list, followed by Brazzaville, Congo (19), which is up eleven places. Rising ten spots, Tashkent (209) in Uzbekistan ranks as the least expensive city in the region and globally.

 

Asia Pacific

This year, Hong Kong (1) emerged as the most expensive city for expatriates both in Asia and globally as a consequence of Luanda’s drop in the ranking due in part to the downward trend in the city’s housing market.  Hong Kong is followed by Tokyo (2), Singapore (4), Seoul (5), Shanghai (7), and Beijing (9). 

“Stronger Chinese monetary regulation, a flourishing economy and a push to have the Chinese Yuan as an international currency pushed Chinese cities up in the ranking,” said Ms. Traber. “However, significant surges in other locations worldwide caused Japanese cities, Osaka and Nagoya in particular, to fall in this year’s ranking.” 

Mumbai (55) is India’s most expensive city, followed by New Delhi (103) and Chennai (144). Kolkata (182) and Bengaluru (170) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok (52) jumped fifteen places from last year. Kuala Lumpur (145) also rose in the ranking, up twenty places, while Hanoi (137) plummeted thirty-seven places. Bishkek (207) and Tashkent (209) remain the region’s least expensive cities for expatriates. 

Australian cities have fallen in the ranking this year. Brisbane (84) and Perth (61) dropped thirteen and eleven spots, respectively, while Sydney (29), Australia’s most expensive ranked city for expatriates, experienced a relatively moderate drop of five places. Melbourne fell twelve spots to rank 58. “Cities in other countries moved up in the ranking, causing Australian cities to drop,” said Ms. Traber. “In general, cities that fall in the middle of the ranking are at greater risk of experiencing significant changes in their positions due to the movement of other cities.” 

Mercer produces individual cost of living and rental accommodation cost reports for each city surveyed. For more information on city rankings, visit www.mercer.com/col. To purchase copies of individual city reports, visit https://mobilityexchange.mercer.com/cost-of-living-rankings or call Mercer Client Services in Warsaw on +48 22 434 5383.

 

Notes for editors

The list of rankings is provided to journalists for reference and should not be published in full. The top 10 and bottom 10 cities may be reproduced in a table. 

The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2018. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living survey have been used as base measurements. 

Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on the demand for data.

 

About Mercer

Mercer delivers advice and technology-driven solutions that help organisations meet the health, wealth and career needs of a changing workforce. Across the Pacific, organisations look to Mercer for global insights, thought leadership and product innovation to help transform and grow their businesses. 

Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With more than 65,000 colleagues and annual revenue over $14 billion, through its market-leading companies including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com.au

Mercer also provides advice and market data on international and expatriate compensation management, and works with multinational companies and governments worldwide. It maintains one of the most comprehensive databases on international assignment policies; compensation practices; and data on worldwide cost of living, housing, and hardship allowances. Its annual global mobility conferences and other events provide companies with the latest trends and research on mobility issues. Visit https://mobilityexchange.mercer.com/ for details. Follow Mercer’s mobility news on Twitter @Mercer

 

Mercer Cost of Living Survey – Worldwide Rankings 2018

(The Mercer international basket, including rental accommodation costs)

Rank as of March

City

Country

2017

2018

2

1

HONG KONG

HKSAR

3

2

TOKYO

Japan

4

3

ZURICH

Switzerland

5

4

SINGAPORE

Singapore

6

5

SEOUL

South Korea

1

6

LUANDA

Angola

8

7

SHANGHAI

China

15

8

NDJAMENA

Chad

11

9

BEIJING

China

10

10

BERN

Switzerland

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