Sydney, currently ranked Australia’s most expensive city for expatriates, has dropped a huge seventeen places from nine to twenty-six in Mercer’s 2014 Cost of Living Survey.
Other Australian cities have also witnessed some of the most dramatic falls in the ranking this year. Melbourne (33) dropped seventeen places while Perth (37) fell nineteen spots. Brisbane (52) and Canberra (53) dropped outside the top fifty after having both previously been inside the top thirty. Adelaide (59) has also fallen twenty five spots from its 2013 ranking.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Garry Adams, Leader of Mercer’s Talent Business, Pacific said, "The results of our latest Cost of Living Index are promising for companies considering establishing headquarters in Australia or relocating expats."
"The drop in rankings mean Australia becomes more attractive for global talent because ex-pats’ dollars will go further, it does not mean that Australian cities have become cheaper for Australians.
"Changes in the value of the Australian dollar against the US dollar are the primary reasons for the drop in our rankings," said Mr Adams.
The strengthening of the Chinese yuan and currencies in Western Europe against the US dollar has also seen countries in these regions become more expensive, and drive Australian and New Zealand cities down the list.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData"We know Australian cities are already a very attractive location for corporates due to our high quality of living, multicultural and multi-lingual workforce and Asian region time zone. The drop in costs means they become even more attractive as a location for global assignments. Companies will find it easier to justify using one of the major Australian cities as a headquarter for their Asia Pacific operations," said Mr Adams.
"Compared to last year, where Sydney sat within the top 10 most expensive cities globally, we were looking at ensuring salaries adequately reflected the difference in cost of living to an employee’s home country in order to attract and retain talent. Now, we’re provided with a lot more flexibility in setting salaries and attracting employees from the global talent pool, knowing the expat dollar will go a lot further here," he said.
Mercer’s authoritative survey is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation allowances for their expatriate employees. New York is used as the base city, and all cities are compared against it. Currency movements are measured against the US dollar.
The survey covers 211 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
"Rankings in many regions were affected by recent world events, including economic and political upheavals, which resulted in currency fluctuations, cost inflation for goods and services, and volatility in accommodation prices," said Ed Hannibal, Partner and Global Leader for Mercer’s Mobility practice.
"While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium. In addition, finding secure living accommodations that meet the standards of expatriates can be challenging and quite costly as well. This is generally why some African cities rank high in our survey," said Mr Hannibal.
Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Bern, Moscow, and Shanghai. Karachi, ranked 211, is the world’s least expensive city for expatriates, and the survey found that Luanda is more than three times as costly as Karachi.
According to Mr. Hannibal, "While multinationals continue to recognise the importance of having a global workforce and corporate assignments remain prevalent, they must be able to monitor and balance the cost of their expatriate programs. Employers need to evaluate the impact of currency fluctuations, inflation, and political instability when sending employees on overseas assignments while ensuring they retain talented employees by offering competitive compensation packages."
Currency fluctuations and the impact of inflation on goods and services have influenced the cost of expatriate programs as well as the city rankings.
Nathalie Constantin-Métral, Principal at Mercer with responsibility for compiling the survey ranking, said, "Interestingly, several cities jumped up the list this year following large increases in both accommodation cost and demand, coupled with strong local currencies. Dhaka and Nairobi (both 117) and Dubai (67) soared thirty seven, thirty and twenty-three spots, respectively."
