Six Australian cities listed in Mercer’s Cost of Living Index 2018

20 July 2018 4 min. read

In the latest edition of consulting firm Mercer’s Cost of Living Index, all Australian cities have fallen in the rankings. Whilst this may have profound effects on attracting international talent, the authors of the report highlight the fact that this is due to other cities becoming more expensive, not Australian cities becoming cheaper.

The global consultancy has been conducting surveys on the quality of living in cities worldwide for over 20 years. Mercer, itself a wholly owned subsidiary of professional services firm Marsh & McLennan, then take the data generated from the survey and incorporate it into the Cost of Living Index.  

By evaluating and ranking cities worldwide in terms of cost, the index is a useful tool for governments and multinational companies to measure expat renumeration and international employee transfers. The index takes into account the price of accommodation based on the average rent an expat would pay as opposed to focusing on the price for locals.

Top 5 global cities for quality of living per region Mercer Index 2018

The worlds ten most expensive cities for expats are; Hong Kong, Tokyo, Zurich, Singapore, Seoul, Luanda (Angola) – which dropped from first place last year – Shanghai, N’djamena (Chad), Beijing and Bern (Switzerland). 

“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 organisations to achieve greater efficiency, utilise 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.”  

“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 Bonic. “And, properly compensating employees on international assignments is as important as it can be costly.” 

Top 10 and bottom 10 global cities for quality of living per region Mercer Index 2018

Sydney took the top Australian spot coming in at joint number 29 with Chinese city Tianjin, having dropped five spots since last year. With little doubt, Sydney is Australia’s most expensive city to live in, often being compared with Tokyo, London and New York. However, the ranking shows that for expats, Sydney is less expensive than Noumea, New Caledonia, Abidjan, Côte d’Ivoire and Tel Aviv, Israel. 

Ahead of Sydney in terms of affordability was Melbourne, Australia’s second most expensive city at number 58 on the index. Melbourne was considered as affordable as the Brazilian megacity São Paulo and was also surrounded by Munich, Germany, Washington, USA and Mumbai, India. Melbourne has long been seen as the more affordable Australian capital, and in this year’s ranking the city fell 12 positions.

Perth appeared next on the index at number 61 after having dropped 11 spots from the previous year. Perth was sandwiched between Miami, USA and Dakar, Senegal. Canberra and Brisbane followed with the respective placements of 77 and 84, and Adelaide brought up the rear with a score of 87. In terms of New Zealand, only Aukland and Wellington appeared on the list, placed 20 points apart at 81 and 101 respectively. 

“Cities in other countries moved up in the ranking, causing Australian cities to drop,” said Karla Costa, Mercer’s global mobility leader who is based in Sydney. “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.” 

Costa commented on what the drop in Australian cities on the index may mean in business terms; “Despite volatile global markets and growing security issues, organisations continue to leverage global expansion strategies to remain competitive.”Trends in costs of living, price of gasoline

“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.”

“Last week, I was in a conference with 150 clients – mostly in Europe,” she said in conclusion. “They said: We don’t have an issue sending people to Australia.”