The Cost of Living survey

The Cost of Living Index prepared by Mercer Human Consulting earlier this week shows Munich as the 43rd of 100 international Cities.

With New York as the base city scoring 100 points, Tokyo scores 130.7 and is more than three times costlier than Asuncion (where?) which has an index of 42.7

Munich sits in 43rd place with an index of 84.0, below London (2nd/119.0), Dublin (14th/96.9), Paris (17th/94.8), Berlin (28th/85.7), Düsseldorf (40th/84.3), and Glasgow(!) (41st/84.1).

Last year Munich sat 62nd in the table with an index of 74.4, so living here has clearly become more expensive in comparison. One wonders how Glasgow rose from 74th place last year to 41st this.

London is the most expensive city in Europe, with a score of 119. High accommodation and transport costs together with the appreciation of the pound against the US dollar have pushed the city up in the rankings. However the scores are based on the cost of living for expatriates, who are more likely to stay in Central London where accommodation is most expensive. Glasgow and Birmingham rank lower in the UK at positions 41 and 51 respectively (scores 84.1 and 82.8).

Since the Euro was introduced in 2002, many European cities have moved up in the rankings.

At the other extreme, three of the five cheapest European cities are in countries that gained EU accession in May. Bucharest in Romania is the least expensive European city ranked 129 (60.1) followed by Limassol in Cyprus in 95th place (70.3).

There's more detail at money.cnn.com and www.mercerhr.com

YL6

I'm a little confused about this !


What the hell has the US dollar got to do with living in London earning british pounds ? Surely the cost of London should be based on the costs against the local currency ?

It's surely kind of hard to compare different countries' cities with one another unless you use some sort of an exchange rate...

well cnn being american, and they making a comparison of all the cities in the world, It's pretty normal that they're using the dollar.

But if you rent an apartment in London for 1000 pounds, its still going to be 1000 pounds if the dollar is not worth anything, and the people in London will earn the same, so using this scheme it makes it a little unfair. It should sort of be based on the average earnings, and what people have left in their pockets surely ?

The Mercer report is used by (bought by!) employers to judge compensation levels for relocatees. I guess the dollar/pound relationship is important if you are an American relocating to Europe. The intent is that the American relocatee to London gets enough pounds in his pocket to maintain his relative standard of living.

YL6

Hiya,
Glasgow is experiencing a boom at the moment and remember that transportation costs are covered by the survey (which pushes UK cities higher up the table).
The survey looks for the cost of renting a luxury unfurnished two-bedroom apartment (not many of those in central Glasgow so those that exist are expensive, note the word "luxury"), the cost of a fast-food hamburger meal, a cup of coffee with table service (how often do you get table service in the UK now? Not as common as in other countries), so cultural differences will account for some of the price differences.
The survey does help companies to make some sort of comparision but it can never tell the whole picture (I mean, do you really want to eat fast-food hamburgers in Barcelona?).
Katrina

That survey sounds a bit rubbish; I lived in Berlin last year and it is cheaper in every way to live there than in Munich.

Whilst Glasgow has got plenty of undesirable areas, the property market is rocketing and house prices are getting completely ridiculous. Houses in the West End of Glasgow when I left for example, where going for 90% above asking price! (Thats double what the house is actually valued at!) Scary biscuits.

Added to this, the council tax in Glasgow is the highest in the UK. (i.e for a two bed flat, u would pay approx. 200 squids a month on top of your rent and bills)

I am suprised however that Edinburgh didnt get a mention. House prices there since the parliament buildings have been built have gone through the roof and you cant actually buy a one bedroom flat for less that 130,000.

I am sure that purchase power parity PPP is used however there is not necessarily an absolute correlation between PPP and currency fluctuations, therefore you end up with slightly distorted figures. In fact, one could argue that currency appreciations help reduce the cost of living because of cheaper imports having a deflationary effect, interest rate cut etc. One thing is for sure is that London has to be the most expensive city in Europe.

PPP is not actually used in the calculation but rather current exchange rates. Exchange rate under- or overvaluations vis-a-vis implied PPP (based on comparisons of goods that theoretically should cost the same...a good approximation is the Economist's Big Mac index) DO INDEED influence the CoL figures but don't distort them. You can argue that the exchange rates themselves are "distorted" in that they don't accurately reflect PPP. But then again PPP is not the Cost of Living. The fact remains that if you're trying to live in a city other than New York on a fixed U.S. dollar salary (basis of the survey), you have to use current exchange rates in order to make a real cost of living comparison.

What pepper was suggesting was a sort of comparison of disposable income as a percentage of salary but that would probably only make sense on an individual case basis (for example, higher earning individuals would obviously have a larger percentage of disposable income than lower wage earners).

End of the day all we want to know is 1. Where's most expensive and 2. Where's best. The answer to both of those questions is the same - London.

That's a controversial statement to make on the Toytown Munich site - isn't it?

it seems to that whatever statement you make, it turns out to be contraversial in Toytown

Out of 100? Says it all really.

This is based on the costs for visiting business people so they do look at what are gonna be higher priced things. ie: lunch in Central London restaurant or a ridiculously overprice ex-pats bar rather than a back street takeaway or a Munich local pub.

just curious... where r the swiss cities ont he list? zurich for example?

@Ketchup

I reckon average rent as a percentage of average income would be a good measure of how expensive a city is, in fact it's the natural one you use when you move somewhere and get an apartment and job.

I liked this: