Prices and Earnings Versus Worldwide Cost of Living

Last week the Economist Intelligence Unit (EIU) released their latest worldwide cost of living index and announced, once again, which city in the world is the most expensive to live in.

And again, for the third year running, that city was Singapore…

Singapore BuildingsIn previous years the release of this report has caused a bit of a stir in the Australian media, but this year the report almost passed me by. In 2012 when this report came out, the Australian press were full of headlines screaming about Australia having some of the world’s most expensive cities.

In the report before that the EIU placed Sydney in sixth position, Melbourne in seventh, Perth 13th and Brisbane as the 14th most expensive city in the world.

In this week’s report, not one of Australia’s cities made the top 10, which is…

EIU 2016For the full list, visit EIU.

As you can see, London is in sixth place this year and Paris, New York and LA all made the top 10.

In fact, only one city from Australia made the top 20 and that was Sydney in 20th position. Here are some city positions of interest:

20 – Sydney
21 = Melbourne
21 = Chicago
24 – Dublin
26 – Manchester
31 – Houston
49 = Brisbane
49 = Vancouver
49 = Miami
53 – Adelaide
56 – Perth

So, the press here have been understandably quiet; ‘Australia’s cost of living is normal‘ is not a great headline and will not sell newspapers.

I did find an article talking specifically about Brisbane in which the Chamber of Commerce and Industry Queensland general manager Nick Behrens said “The cost of living has not fallen in Brisbane for the average person. If you have a pile of US dollars or euros, sure Brisbane would be more affordable, but not for you or I.

He explained that the apparent fall in the cost of living in Australian cities was more to do with the weakening of the Australian dollar against USD.

Precisely; and that’s exactly what I said in my article Australian Cities: Most Expensive in the World? And in the follow-up in 2012 when the media were trying to claim Australia was becoming expensive. Except I was saying it the other way round, at the time the Australian dollar was strong, but nobody in the media was saying ‘Well the cost of living hasn’t got up in Australia for the average person.

Just goes to show that only bad news sells.

There is a much at away to work out how expensive, or not, a city might be.

UBS: prices and earnings

Whilst the EIU index is extraordinary useful to US holidaymakers thinking of going abroad, it doesn’t appear to be much use to anybody else. For those wanting to know what it’s really like to actually live in and work in various cities then the UBS method is much better.

I’ve been using a similar method here with the Hard Yakka, calculating how long it takes to earn the money to buy stuff and comparing it between, mainly, Australia and the UK and sometimes the US. Recently, I discovered the UBS report; of course, they create a much more comprehensive report than I do, covering many more countries.

In their report of last year, they looked at how many minutes it took to earn enough money to buy four popular items in different cities; a Big Mac, a kilo of bread, a kilo of rice and an iPhone 6 16 GB.

Yes, that’s right, all the essentials.

In this particular case, cities pretty much equal countries because the results for, say, New York, Chicago and Miami were all pretty much the same. So I decided to compare those rates for the top eight (ish) countries that visit this website by just picking the biggest city listed for them.

Now, I am as excited as you are, because I really don’t know what the result will be until I have finished creating the ‘Prices and Earnings’ table which I will do right now.

OK, it is done.

The Prices and Earnings table

prices indexThe reason I said ‘top eight (ish) countries’ for this is that Singapore was actually seventh in my top visitors list. Unfortunately UBS didn’t have Singapore on their list. Interesting though that the cheapest city in which to buy a all these things, which was Zürich in Switzerland at just 20 hours and 57 minutes, is cited as the second most expensive city in the world by EIU.

Source: UBS

Conclusion

1) It’s pointless judging the cost of living in a city or country without also taking into account the earnings potential. Unless you’re looking to book a holiday.

2) Australia comes second only to the US in this list, and that’s all down to the iPhone.

3) iPhones may be cheap to buy in the US, but last time I looked, they do rather sting you for the mobile phone plan.

It's good to share...Share on Facebook0Tweet about this on Twitter0Share on Google+0Share on Reddit0Pin on Pinterest0Share on StumbleUpon0

Related Posts

Open a bank account in Australia
{ 6 comments… add one }
  • jim March 21, 2016, 9:30 pm | Link

    cant remember where i picked this nugget from but best places in the world to retire to? i remember portugal south west casais was no 3 where does oz rank ?

    • BobinOz March 22, 2016, 5:12 pm | Link

      I wouldn’t have thought Australia ranks highly, because the cost of living can seem high for those who are not earning an Australian salary. I think the tendency for retirees is to move to a country where they get more bang for their buck, I don’t think Australia would be that country.

      It’s probably why Portugal came third though, and years ago, probably about 10 to 15, I remember reading that the place to go was Panama of all places.

  • brian March 17, 2016, 11:31 am | Link

    if as a person who has dual nationality british /aus where is the best place to live in as a 60 year old ,been in oz most of my life

    • BobinOz March 17, 2016, 4:39 pm | Link

      Do you mean financially? I think it’s in possible to say Brian, it would very much depend on your own personal situation, whether you’re working or not, where your pension is or will come from, your savings, there are all sorts of variables to take into account.

  • Adrian March 17, 2016, 12:51 am | Link

    Bob, where can I find the UBS calculator to make my own ‘Prices and Earnings table’ comparing other cities?

    • BobinOz March 17, 2016, 4:18 pm | Link

      If you click on the link to UBS in the above article, you can scroll to the bottom of that page to where it says something like ‘Download the full 2015 report’. That will download a PDF to your PC.

Leave a Comment

If your comment doesn’t get answered, find out why…..
FAQs and Comment Policy.

torfx-ad