The Burrow
Nov 4, 2024
Cost of living. It’s a phrase that has become more poignant in recent years globally, following a significant rise in transport and material costs, supply chain disruptions, and the resurgence of interstate and international migration putting pressure on property markets.1
As experts in helping Australians to compare home loans, we looked at 11 different factors across 42 economically-developed capital cities to determine the most cost-effective places to live in globally.
Here are the results.
Seoul was ranked the most cost-effective city to live in, with the lowest unemployment rate out of all 42 cities studied at 2.50%.
The combination of low 3.50% cash rate, 11.10% and 8.50% house and rent price increases respectively since 2015, and AU$0.194 per kilowatt-hour (kWh) average electricity rates allowed South Korea’s capital to be at the top.
However, it had a relatively high cost of milk and bread, and low average annual wages compared to other cities.
Brisbane came out as the second-most cost-of-living friendly city, with the help of the ultra-low $0.50 public transport fares trial – which is expected to continue indefinitely.2
Additionally, Australia’s average fuel prices were comparatively cheaper at $1.680 per litre for 95 RON unleaded petrol, rent prices have experienced a 17.70% increase since 2015, and the unemployment rate sits at only 4.20%.
But the ‘River City’ was just sub-par for typical electricity costs, the cost of a milk bottle, bread loaf, and the cash rate.
Luxembourg benefits from the highest average wages at $126,690 per year and free public transport access since 2020.3
The European capital also scored highly thanks to a low 3.65% cash rate, 13.10% rent price increase and 41.80% house price increase since 2015.
However, the price of buying a bread loaf, coffee, and milk bottle is among the highest globally with a higher than average unemployment rate.
Reykjavík ranked at the bottom of the cost-of-living index with the most expensive prices for transport — $3.321 per litre for petrol and $6.81 for a typical one-way public transport fare.
Similarly, it didn’t perform well due to a 145.80% house price increase since 2015, high 9.25% cash rate, and $7.79 for a typical cup of coffee.
Yet, even with high annual wages, low electricity prices and unemployment rate, these cost-of-living friendly factors still weren’t enough to lift Iceland’s capital from the bottom.
While San José, Costa Rica was second-bottom in the index, this was due to the lack of house and rent price index data, where scores of zero were given and isn’t wholly representative for cost-of-living friendliness.
Therefore, Denmark was indexed as among the least cost-of-friendly cities with the highest price of purchasing a coffee at $9.85.
The price of petrol at $3.099 per litre, a bottle of milk at $3.02, and bread loaf at $5.60 were also among the highest globally.
However, the Denmark capital has an above-par cash rate, house and rent price increases, and average annual wages compared to other cities.
Dublin placed the third-least cost-effective city to live — driven by the highest energy rates out of all cities studied at $0.721 per kWh.
This is compounded by the typical renting price being increased by 67.90% since 2015, high fuel costs at around $2.877 per litre, and sizable coffee prices set at $6.54 on average.
But Dublin’s cash rate is a low 3.65%, while the price of milk and public transport were considered average relative to other cities.
| Rank | City, Country | Cash Rate (%) | Average Annual Wage | Unemployment Rate (country %) | Average Fuel Price (per litre) | Average Electricity Price (per kWh) | Typical Public Transport (one-way fare) | Typical Milk Price (1 litre) | Typical Bread Price (500g white loaf) | Typical Coffee Price (cappuccino) | House Price Index (since 2015) | Rent Price Index (since 2015) | Overall Index Score |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 🇰🇷Seoul, South Korea | 3.50 | 70,680 | 2.5 | 1.840 | 0.194 | 1.66 | 3.40 | 4.89 | 5.83 | 111.1 | 108.5 | 6.69 |
| 2 | 🇦🇺Brisbane, Australia | 4.35 | 94,694 | 4.2 | 1.680 | 0.400 | 0.50 | 2.23 | 3.56 | 5.48 | 152.1 | 117.7 | 6.31 |
| 3 | 🇱🇺Luxembourg City, Luxembourg | 3.65 | 126,690 | 5.8 | 2.389 | 0.362 | 0.00 | 2.30 | 4.75 | 6.39 | 141.8 | 113.1 | 6.26 |
| 4 | 🇪🇸Madrid, Spain | 3.65 | 70,765 | 11.5 | 2.445 | 0.364 | 2.47 | 1.78 | 2.34 | 4.12 | 153.8 | 111.2 | 6.22 |
| 5 | 🇸🇮Ljubljana, Slovenia | 3.65 | 78,947 | 3.3 | 2.393 | 0.342 | 2.14 | 2.13 | 2.98 | 3.57 | 193.5 | 170.5 | 5.93 |
| 6 | 🇸🇰Bratislava, Slovak Republic | 3.65 | 44,199 | 5.3 | 2.494 | 0.317 | 1.81 | 1.80 | 2.82 | 4.35 | 175.6 | 122.2 | 5.92 |
| 7 | 🇦🇺Melbourne, Australia | 4.35 | 94,694 | 4.2 | 1.680 | 0.400 | 5.30 | 2.13 | 3.97 | 5.24 | 152.1 | 117.7 | 5.67 |
| 8 | 🇮🇹Rome, Italy | 3.65 | 68,121 | 6.5 | 2.895 | 0.688 | 2.47 | 2.58 | 2.76 | 2.41 | 109.1 | 108.6 | 5.59 |
| 9 | 🇲🇽Mexico City, Mexico | 10.75 | 29,759 | 2.7 | 1.950 | 0.150 | 0.46 | 2.22 | 3.71 | 4.68 | 199.8 | 128.2 | 5.52 |
| 10 | 🇨🇿Prague, Czechia | 4.50 | 52,699 | 2.7 | 2.375 | 0.511 | 1.97 | 1.55 | 2.43 | 4.80 | 214.9 | 141.0 | 5.46 |
| 11 | 🇹🇷Ankara, Türkiye | 50.00 | 55,929 | 8.8 | 1.805 | 0.071 | 0.78 | 1.52 | 1.29 | 3.88 | 1,531.0 | 917.4 | 5.43 |
| 🇵🇱Warsaw, Poland | 5.75 | 58,215 | 2.9 | 2.377 | 0.352 | 1.70 | 1.58 | 1.69 | 5.58 | 200.3 | 167.3 | ||
| 12 | 🇩🇪Berlin, Germany | 3.65 | 92,541 | 3.4 | 2.676 | 0.605 | 5.77 | 1.87 | 3.22 | 6.06 | 145.1 | 115.2 | 5.41 |
| 13 | 🇦🇺Sydney, Australia | 4.35 | 94,694 | 4.2 | 1.680 | 0.400 | 5.00 | 2.63 | 4.24 | 5.20 | 152.1 | 117.7 | 5.40 |
| 🇵🇹Lisbon, Portugal | 3.65 | 52,848 | 6.2 | 2.716 | 0.329 | 3.30 | 1.59 | 2.33 | 3.98 | 213.1 | 130.3 | ||
| 14 | 🇱🇻Riga, Latvia | 3.65 | 54,697 | 6.9 | 2.461 | 0.444 | 2.47 | 1.92 | 2.26 | 5.31 | 196.1 | 121.8 | 5.33 |
| 15 | 🇫🇷Paris, France | 3.65 | 82,479 | 7.5 | 2.762 | 0.426 | 3.55 | 2.27 | 3.03 | 6.64 | 126.1 | 107.5 | 5.27 |
| 16 | 🇺🇸Chicago, USA | 5.50 | 114,395 | 4.3 | 1.380 | 0.240 | 3.71 | 1.57 | 6.15 | 7.75 | 196.2 | 147.5 | 5.18 |
| 17 | 🇳🇱Amsterdam, Netherlands | 3.65 | 97,233 | 3.6 | 3.114 | 0.477 | 5.61 | 1.92 | 3.16 | 6.53 | 141.8 | 124.9 | 5.11 |
| 🇭🇺Budapest, Hungary | 6.75 | 44,759 | 4.3 | 2.448 | 0.162 | 1.88 | 1.64 | 2.39 | 3.62 | 285.1 | 187.2 | ||
| 18 | 🇨🇴Bogotá, Colombia | 10.75 | 38,943 | 9.8 | 1.435 | 0.282 | 1.06 | 1.81 | 1.95 | 2.23 | N/A | 141.9 | 5.07 |
| 🇺🇸Los Angeles, USA | 5.50 | 114,395 | 4.3 | 1.380 | 0.240 | 2.60 | 1.80 | 7.53 | 8.03 | 196.2 | 147.5 | ||
| 19 | 🇺🇸Washington D.C., USA | 5.50 | 114,395 | 4.3 | 1.380 | 0.240 | 3.71 | 1.63 | 6.33 | 8.08 | 196.2 | 147.5 | 5.03 |
| 20 | 🇱🇹Vilnius, Lithuania | 3.65 | 69,352 | 8.0 | 2.282 | 0.428 | 1.07 | 2.10 | 2.34 | 5.21 | 228.0 | 176.9 | 5.00 |
| 21 | 🇬🇷Athens, Greece | 3.65 | 42,553 | 9.9 | 2.871 | 0.406 | 1.98 | 2.58 | 2.00 | 5.66 | 160.5 | 102.7 | 4.94 |
| 22 | 🇫🇮Helsinki, Finland | 3.65 | 81,543 | 8.5 | 2.925 | 0.299 | 4.87 | 2.10 | 4.44 | 7.35 | 102.5 | 117.4 | 4.83 |
| 23 | 🇧🇪Brussels, Belgium | 3.65 | 103,504 | 5.4 | 2.599 | 0.628 | 4.04 | 2.41 | 4.08 | 6.11 | 139.8 | 126.1 | 4.74 |
| 24 | 🇨🇭Bern, Switzerland | 1.25 | 117,325 | 4.1 | 3.092 | 0.531 | 5.27 | 3.09 | 5.07 | 8.30 | 136.7 | 111.2 | 4.67 |
| 25 | 🇸🇪Stockholm, Sweden | 3.50 | 81,532 | 8.6 | 2.416 | 0.360 | 6.11 | 2.26 | 4.18 | 6.74 | 130.3 | 119.9 | 4.64 |
| 26 | 🇬🇧London, UK | 5.00 | 81,728 | 4.1 | 2.658 | 0.608 | 3.27 | 2.67 | 3.49 | 5.19 | 143.5 | 126.7 | 4.62 |
| 27 | 🇨🇦Toronto, Canada | 4.25 | 93,911 | 6.4 | 1.881 | 0.186 | 3.65 | 4.78 | 4.19 | 6.09 | 176.3 | 131.1 | 4.60 |
| 28 | 🇳🇿Wellington, NZ | 5.25 | 82,914 | 4.6 | 2.535 | 0.292 | 3.90 | 2.80 | 3.07 | 5.23 | 171.8 | 132.7 | 4.53 |
| 29 | 🇨🇱Santiago, Chile | 5.50 | 49,844 | 8.1 | 2.137 | 0.263 | 1.30 | 1.89 | 2.47 | 4.52 | N/A | N/A | 4.52 |
| 30 | 🇪🇪Tallinn, Estonia | 3.65 | 51,142 | 7.5 | 2.566 | 0.424 | 3.30 | 1.79 | 1.96 | 6.02 | 206.7 | 157.3 | 4.50 |
| 31 | 🇺🇸New York, USA | 5.50 | 114,395 | 4.3 | 1.380 | 0.240 | 4.30 | 2.19 | 7.06 | 8.70 | 196.2 | 147.5 | 4.49 |
| 32 | 🇦🇹Vienna, Austria | 3.65 | 99,886 | 5.0 | 2.477 | 0.452 | 3.96 | 2.42 | 4.38 | 6.30 | 161.3 | 141.6 | 4.44 |
| 33 | 🇳🇴Oslo, Norway | 4.50 | 99,558 | 3.9 | 2.883 | 0.212 | 5.88 | 3.19 | 4.87 | 6.72 | 142.1 | 123.3 | 4.38 |
| 34 | 🇮🇪Dublin, Ireland | 3.65 | 79,078 | 4.7 | 2.877 | 0.721 | 3.24 | 2.12 | 2.80 | 6.54 | 177.8 | 167.9 | 4.16 |
| 35 | 🇩🇰Copenhagen, Denmark | 3.10 | 97,191 | 5.8 | 3.099 | 0.579 | 5.30 | 3.02 | 5.60 | 9.85 | 138.5 | 115.2 | 3.89 |
| 36 | 🇨🇷San José, Costa Rica | 4.75 | 53,830 | 8.5 | 2.056 | 0.259 | 1.41 | 2.81 | 3.75 | 5.31 | N/A | N/A | 3.71 |
| 37 | 🇮🇸Reykjavík, Iceland | 9.25 | 120,545 | 3.1 | 3.321 | 0.232 | 6.81 | 2.51 | 5.37 | 7.79 | 245.8 | 160.6 | 3.21 |
Prices listed are in AUD. Where publicly available data was unavailable (as indicated by N/A), a score of zero was given for the particular data points.
Other key findings include:
Compare the Market’s General Manager of Money, Stephen Zeller, said there was no ‘perfect’ city for cost-of-living, but there are ways to reduce money pressures.
“Whether it’s your home loan, energy plan or insurances, there are opportunities to ensure you’re not paying a cent more than you should on everyday bills,” Mr Zeller said.
“Comparison is the key. The power is in consumers hands’ to actively compare options that are available.
“If your home loan is taking a larger-than-ideal portion off your payslip, it’s worth comparing what’s on offer from lenders, look for a better deal, and switch to help ease one major cost-of-living pressure.”
Using 42 different capital cities across 37 economically developed countries globally, we indexed 11 different cost-of-living factors:
Each factor was indexed relative to each country with equal weighting, then averaged to produce an overall index score out of 10. A higher score represents better cost-of-living.
Where publicly available data was unavailable, a score of zero was given for the particular data points.