The Burrow
Countries with the highest cost of living
Apr 17, 2023
There’s no escaping it, the cost of living is getting worse. So many different expenses are going up in countries across the world, regardless of category, such as housing, rent, fuel, utilities and food, just to name a few.
However, some countries have a significantly higher cost of living than others.
By crunching the numbers and weighing up multiple factors, the home loan experts at Compare the Market have created the Cost of Living Index 2023 to see which countries are facing some of the highest expenses in multiple areas of life – though that isn’t to say individuals in any of the 39 nations we looked at won’t be feeling stressed or pressured financially.
Scroll down to see what we found when we analysed 10 different factors for 39 countries around the globe.
The interest rate on a home loan (which is affected by cash rates) can have a big impact on the amount of money you need to pay over the course of a mortgage. Compare the Market’s General Manager of Money, Stephen Zeller, says comparing or refinancing for a better rate could save thousands of dollars, which can have a great impact on day-to-day cost of living.
“Whether you’re looking to take out a home loan, or already have a mortgage and are thinking about getting a better interest rate, comparing options can help you find a lower interest rate to apply for,” says Zeller. “Even half a percentage point could save you hundreds or thousands off the course of a 25-to-30-year mortgage.”
“It doesn’t take long to compare options before you apply for a new loan or refinance an existing loan, and it can make a huge impact to your mortgage, helping ease housing costs,” Zeller continues. “In a time of increased cost of living pressures, any little bit of savings can help make a difference.”
The worst of the countries we looked at for cost of living was Israel, which scored 6.61/10. Israel had high costs pressures in several areas, but most noticeably Israel had the fifth-highest average years of rent ratio at 30 years (the same as Denmark), the eighth-most expensive fuel price per litre at US$1.94/L, the ninth-highest annual grocery bill at US$4,062 per person and the tenth-highest annual cost of utilities at US$2,721.
Hot on Israel’s heels was Norway, with a score of 6.58/10. Norway had the second-highest household debt as a percentage of disposable income at 245.34%, the most expensive fuel price (at time of writing) at USD$2.131/L, second-most expensive public transport fares (US$3.80 on average for an adult fare), and the third-highest groceries at US$4,924.32 on average per year.
Just behind Norway’s was Switzerland, who scored 6.52/10. Switzerland had the highest average expense on groceries at US$8,332 per year, third-highest level of household debt to income at 227.52%, and the highest number of years renters would have to spend renting to have paid the value of their property (34 years). Switzerland also had the most expensive public transport at US$3.87 per fare. Switzerland’s low cash rate and high annual income helped save the European nation from ranking higher on our index.
Colombia was ranked as having the lowest indexed cost of living at 3.04/10 – though it’s worth noting that Colombia also had the second-smallest income at US$4,413 per year, on average. Colombia also had the second-cheapest average annual grocery bill at US$1,392.84. Colombia also had the cheapest price for petrol at US$0.599/L and the fourth-cheapest public transport at US$0.57 per fare.
Colombians on average have the fifth-smallest number for the renting to house price ratio at 16 years (a result shared by Italy, the United Kingdom, Romania and the United States). Colombians also had the fifth-lowest levels of household debt in comparison to disposable income at 51.71%.
Brazil scored 3.16/10 in our Cost of Living Index. The nation had the third-cheapest petrol at US$1.011/L, sixth-cheapest public transport cost at US$0.92 a fare, plus the fifth-cheapest utilities at US$869.76 per year. Food was also fairly affordable as Brazil had the fifth-cheapest groceries at US$2,025.36 per year.
While many costs are low, Brazilians didn’t have a lot of cash to throw around, as the country had the third-lowest average income at US$6,414 per year. Additionally, Brazil had the highest cash rate as of time of writing at 13.75%, which can affect the interest rates on loans and household debt.
The country with the third-lowest indexed cost of living was Lithuania, which scored 3.33/10. Some of the areas Lithuania did really well in include household debt and years spent renting to pay the value of the home. Lithuania had the fourth-lowest household debt percentage of disposable income at 45.44% and the second-shortest years of renting to buy ratio at 13 years. Lithuania was also in the top 10 countries for cheap public transport at US$0.96 per fare.
Australia sits closer to the expensive end of the Cost of Living Index, sitting in 14th place out of 39 countries with a score of 5.12/10. Australia had the fifth-highest debt as a percentage of disposable income at 211.18% and ranked ninth for public transport costs at US$3 (AU$4.47) per fare (on average) The average amount spent on groceries per person was the 11th-most expensive at US$3,984 (AU$5877.80).^
Areas where Australia did well include annual income and cash rate. When it comes to earnings, Australia had the eighth-highest average annual salary at US$56,600 (AU$82,466 rounded to the nearest dollar).^
| Country | Cash rate | Debt % of disposable income | Nominal house prices (index) | Years of rent ratio | Fuel (USD/L) | Public transport (USD per fare) | Annual income (USD) | Utilities (USD per year) | Groceries (USD per year) | Index Score |
| Israel | 4.25% | 122.37%* | 152.70 | 30 | $1.94 | $1.68 | $42,165 | $2,721 | $4,062 | 6.61 |
| Norway | 2.75% | 245.34% | 142.58 | 28 | $2.13 | $3.80 | $58,377 | $2,415 | $4,924 | 6.58 |
| Switzerland | 1.00% | 227.52% | 133.95 | 34 | $1.95 | $3.87 | $68,957 | $2,891 | $8,332 | 6.52 |
| Czech Republic | 7.00% | 77.17% | 221.26 | 26 | $1.68 | $1.13 | $31,711 | $3,386 | $2,939 | 6.32 |
| Denmark | 2.10% | 254.58% | 136.25 | 30 | $2.11 | $3.46 | $61,331 | $2,423 | $4,300 | 6.27 |
| Netherlands | 3.00% | 221.66% | 189.07 | 20 | $1.91 | $3.54 | $60,923 | $2,774 | $3,920 | 6.26 |
| Germany | 3.00% | 101.51% | 165.50 | 32 | $1.88 | $3.11 | $56,040 | $3,334 | $3,545 | 5.90 |
| Austria | 3.00% | 94.35% | 175.42 | 31 | $1.68 | $2.68 | $58,189 | $3,421 | $4,144 | 5.86 |
| New Zealand | 4.75% | 122.28% | 179.35 | 27 | $1.59 | $2.17 | $46,976 | $1,614 | $3,910 | 5.75 |
| France | 3.00% | 124.33% | 134.20 | 25 | $1.96 | $1.82 | $49,313 | $2,112 | $4,367 | 5.49 |
| Estonia | 3.00% | 79.37% | 193.35 | 22 | $1.82 | $1.61 | $33,188 | $3,343 | $2,918 | 5.47 |
| United Kingdom | 4.00% | 148.41% | 148.72 | 16 | $1.74 | $3.03 | $49,979 | $2,835 | $2,749 | 5.32 |
| Finland | 3.00% | 155.96% | 112.49 | 24 | $2.03 | $3.22 | $49,708 | $1,474 | $3,801 | 5.15 |
| Australia | 3.60% | 211.18% | 143.56 | 19 | $1.11 | $3.00 | $56,600 | $2,327 | $3,984 | 5.12 |
| Sweden | 3.00% | 203.13% | 138.16 | 22 | $1.87 | $3.30 | $48,951 | $1,027 | $3,731 | 5.07 |
| Canada | 4.50% | 185.19% | 169.75 | 18 | $1.24 | $2.37 | $56,006 | $1,674 | $4,048 | 5.01 |
| Hungary | 13.00% | 45.17% | 257.37 | 20 | $1.69 | $0.98 | $26,268 | $1,724 | $2,592 | 5.01 |
| Portugal | 3.00% | 126.88% | 193.91 | 19 | $1.78 | $1.82 | $29,740 | $1,451 | $2,490 | 4.92 |
| Ireland | 3.00% | 111.41% | 167.78 | 21* | $1.71 | $2.47 | $51,045 | $2,443 | $3,215 | 4.81 |
| Croatia | 3.00% | 122.37%* | 163.37 | 24 | $1.57 | $1.42 | $13,503 | $2,079 | $2,718 | 4.67 |
| Slovak Republic | 3.00% | 86.94% | 179.92 | 22 | $1.64 | $0.96 | $24,805 | $2,525 | $2,842 | 4.67 |
| Belgium | 3.00% | 118.99% | 135.10 | 24 | $1.80 | $2.68 | $59,100 | $2,283 | $3,675 | 4.61 |
| South Korea | 3.50% | 206.48% | 115.22 | 21* | $1.11 | $1.00 | $42,747 | $1,832 | $6,345 | 4.58 |
| United States | 4.75% | 101.17% | 181.77 | 16 | $0.98 | $2.50 | $74,738 | $2,193 | $4,749 | 4.58 |
| Slovenia | 3.00% | 51.99% | 177.37 | 24 | $1.43 | $1.39 | $43,892 | $2,998 | $3,133 | 4.55 |
| Greece | 3.00% | 92.92% | 133.56 | 18 | $2.00 | $1.29 | $25,744 | $2,693 | $2,905 | 4.44 |
| Latvia | 3.00% | 37.20% | 187.02 | 15 | $1.70 | $1.23 | $32,235 | $3,455 | $2,750 | 4.33 |
| Japan | -0.10% | 121.58% | 126.69 | 23 | $1.19 | $1.64 | $39,711 | $2,107 | $4,524 | 4.21 |
| Türkiye | 8.50% | 122.37%* | 803.04 | 18 | $1.08 | $0.42 | $32,483 | $813 | $1,759 | 3.96 |
| Italy | 3.00% | 90.48% | 106.85 | 16 | $1.96 | $1.61 | $40,767 | $2,373 | $3,651 | 3.90 |
| Poland | 6.75% | 59.08% | 167.43 | 15 | $1.51 | $0.92 | $33,566 | $2,555 | $2,173 | 3.90 |
| India | 6.50% | 122.37%* | 138.37 | 23 | $1.27 | $0.31 | $2,196 | $438 | $1,393 | 3.87 |
| Romania | 7.00% | 122.37%* | 144.76 | 16 | $1.43 | $0.65 | $18,634 | $1,611 | $2,202 | 3.87 |
| Spain | 3.00% | 101.14% | 143.42 | 18 | $1.72 | $1.61 | $39,202 | $1,669 | $2,853 | 3.73 |
| Mexico | 11.00% | 25.62% | 172.54 | 18 | $1.33 | $0.55 | $16,429 | $676 | $2,604 | 3.62 |
| South Africa | 7.25% | 122.37%* | 132.34 | 11 | $1.22 | $1.37 | $16,439 | $1,135 | $1,899 | 3.53 |
| Lithuania | 3.00% | 45.44% | 200.26 | 13 | $1.59 | $0.96 | $42,027 | $2,305 | $2,729 | 3.33 |
| Brazil | 13.75% | 55.12% | 106.39 | 19 | $1.01 | $0.92 | $6,414 | $870 | $2,025 | 3.16 |
| Colombia | 12.75% | 51.71% | 151.69 | 16 | $0.60 | $0.57 | $4,413 | $736 | $1,495 | 3.04 |
To calculate the indexed scores, we gathered data for 10 different metrics for 39 different countries. For each factor, countries were scored out of 10, with 10 representing a higher cost of living pressure. The worst figure within each metric was given a score of 10, and the best was given a score of 1, with all the remaining figures given a normalised score between 1 and 10 depending on where they sat in relation to each other. All scores were then averaged to create an overall score out of 10 for each country. The metrics used, their sources and how they were scored are listed below:
* Where a country was missing data for a particular metric, the average result from all other countries was used for the purposes of calculations.
^ Price was converted into AUD on 21/03/2023 using Google’s currency converter tool.