The Pros and Cons of High and Low Cost of Living: Key Takeaways from 2019 EIU Survey
The Economist Intelligence Unit or EIU is an organisation that conducts extensive research and surveys to document and spread awareness on how the world is changing. The annual report ranks 132 cities across the globe by their cost of living. Additionally, the report summarises the factors that build up the changes in the ranking.
From the Cost of Living 2019 EIU survey, the global cost of living has been the lowest in five years. In 2019 it’s fallen to 69%, from 73% last year. Though, it’s the first time that there are three cities tagged as the most expensive cities to live in. These being Singapore, Hong Kong and Paris.
Meanwhile, the cheapest cities to live are deemed to be those cities that are not ideal to live in and would not be suited to expats. These countries are in chaos due to government’s lack of political control and social unrest. These countries include Turkey and Caracas in Venezuela that are ranking as the cheapest cities to live.
The following were the main factors that had a significant impact in cities with high and low cost of living and should be considered if you’re looking to relocate:
- Currency movements
- Political Instability
- Wage and public spending capacity
- Government policy incapacity
- Lack of competition in the retail and wholesale sector
- Currency Appreciation
Out of those currency and inflation, fluctuations are hugely responsible for the changes in day to day spends. The strength of a currency will be impacted by interest rates, economic growth and inflation. Along with external factors which can cause it to drop; in Turkey and Argentina for example, external imbalances, political instability and poor policymaking have led to a currency crisis.
Cities with High Costs of Living
For the first time there were three cities that ranked as the most expensive cities in the world. The first being Singapore, which is consecutively at the top along with Hong Kong and Paris. Other Asian cities like Osaka in Japan and Seoul in South Korea are also featured in the top ten.
Two cities from Europe made it in the top ten with two entries from Switzerland, Geneva and Zurich. Lastly, due to strong performance of US dollar in the previous year, Los Angeles and New York made it to the list.
One city which has jumped up the rankings is Tel Aviv. Ranking at 28 just 5 years ago, it now joins LA in joint 10th due to currency appreciation and costs driving up prices such as buying and keeping a car. This alone has pushed transport costs 64% above New York’s.
Where these cities have a high cost of living, some attract a large expat population due to their career opportunities and lifestyle, with Singapore home to around 45,000 British expats.
Pros in Moving to Places with High Cost of Living
If you’re considering an international move to one of these cities, it’s worth researching the cost of living along with the pros and cons of relocating.
- Career and Business OpportunitiesCost of living goes with the wage levels in most cities. Countries like Singapore are the home of international brands and corporations, providing a lot of opportunities for both business and individuals.
- EconomyA stable economy boosts the potential and growth of businesses. A booming economy attracts professionals and businesses to the area to reap the benefits.
- EducationMost of these cities are home to highly competitive and well renowned international schools. This advantage allows expat families to plan for the future of their children.
- CultureMost of the cities in the top ten have a ‘welcoming culture’ and thriving community for expats. These cities have established institutions and facilities that helps expats adapt to their culture.
- HealthcareSingapore and France are known to have top of the line healthcare facilities and services. In France, the government shoulders the majority of the medical needs of registered citizens that have stayed for three months. Those with serious illnesses like cancer can avail to 100% coverage from the state health insurance.
Cons of Moving to Places with High Cost of Living
- Expensive commoditiesCommodities and rentals are all tied to the wages of people living in the area. If the majority of the workforce are earning six figure salaries. It is highly likely to be reflected in the cost of everything in the area.
- Cost of housingThe average apartment rent in Zurich costs 2,324 francs ($2,381) with an average household income of $36,378 a year. If you opt on having a more comfortable lifestyle, the options are to either set yourself up for a high paying job or compromise by moving to a cheaper suburb.
- Stiff CompetitionIn both career and business, there’ll be a wide array of competition ahead of you, but this is where individuals and businesses thrive. Make sure you’re wholeheartedly ready for the ride ahead.
- SpendingThe majority of these cities are full of attractions and activities for visitors and locals. There is always a temptation to spend, so working out your priorities and cost of living will help you enjoy everything these cities have to offer.
Countries with Low Cost of Living
Cities that have dropped heavily in the rankings have done so due to economic turmoil, currency weakness and falling local prices. This includes places such as Argentina, Brazil, Turkey and Venezuela.
Caracas, Venezuela is ranked as the cheapest city in the world. Here, the cost of living changes daily due to the political instability , a new currency and inflation nearing 1,000,000%. These are typically not countries or cities that expats tend to move, especially considering the risk factor.
The majority of the cheapest cities cited in the EIU survey are from Asia. Ironically, Asia is the home to both the most expensive and the cheapest. Most of these cheapest cities are encountering political instability and social unrest.
International moves are increasing due to the changes in the world market and countries with a high cost of living continue to thrive and attract large numbers of expats every year. If you need help planning your international move, get in touch with our relocation specialists.