July 10, 2014 – 2:52PM
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The dollar may still be stubbornly high, but it has weakened enough to knock Sydney off a list of the world’s 10 most expensive cities.
Sydney, which is still Australia’s most expensive city, has plunged from ninth position to 26th in Mercer’s 2014 Cost of Living survey.
The survey covers 211 cities across five continents and measures costs including housing, transportation, food, clothing, household goods and entertainment.
Australia’s other capital cities also fell down the list this year, with Melbourne dropping 17 places to 33, while Perth fell 19 spots to 37. Brisbane dropped outside the top 50.
Garry Adams, leader of Mercer’s Talent business, said a softening of the dollar against the US currency was the “primary reason” for the drop in rankings. Since July 2010, the dollar has dived 14.6 per cent to US94.06¢.
As such, the changes did not mean Australian cities had become more affordable for residents. But Mr Adams said it had made Australia more competitive globally, particularly in attracting talented staff.
“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 to attract and retain talent,” he said.
“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.”
Mr Adams said the fall in rankings could also make Australian cities more appealing for companies to use as headquarters for their Asia and Pacific operations.
“The drop in costs means they [Australian cities] become even more attractive as a location for global assignments.”
China had a swag of cities jump in rankings, with Shanghai leaping three places to enter the top 10 after being ranked 14th last year. Beijing was next, at 11th, with Shenzhen rising 12 spots to 17th and Guangzhou 11 places to 24th.
Mr Adams attributed the increases to currency fluctuations. The Chinese yuan has rallied more than 10 per cent against the US dollar since 2010.
“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 driven Australian and New Zealand cities down the list.”
Luanda, the capital of Angola, maintained its position as the world’s most expensive city for expatriates, while Chad’s N’Djamena came second.
“While Luanda and N’Djamena are relatively inexpensive cities, they are quite costly for expatriates since imported goods come at a premium,” said Ed Hannibal, Mercer partner and global leader for mobility practice.
“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 higher in our survey.”
Rounding out the top 10 were the usual suspects: Hong Kong (3), Singapore (4), Zurich (5), Geneva (6), Tokyo (7), Bern (8) and Moscow (9).