No Deals Down Under

Posted By on 05/06/2011 cost-of-living index shows many of world’s most expensive cities are in Australia; cheapest are in India

Tokyo may have 13 million residents, but most of the world's population would not be able to afford life there.The Japanese capital ranks first's June 2011 global cost-of-living index.

Expatistan is a year-and-a-half-old company dedicated to providing information to expatriates and potential expatriates before relocation to a new city or country. Founded in January 2010 by software engineer Gerardo Robledillo, a Spanish expatriate currently living in the Czech Republic, its cost-of-living index is a crowd-sourced, algorithm-generated list of cities ranked by price data submitted by expatriates living around the world.

Expatistan invites expats to enter local prices for goods ranging from toothpaste to utilities, and compiles constantly adjusted scores for each city in its database.Robledillo still runs the site by himself, but its contributors come from around the world.Since its founding, 34,000 users have submitted 150,000 prices from 550 cities in 110 countries.Its database includes over 900 cities, but its index only ranks cities on which substantial data has been entered, and it grows as reliable data on more cities arrives.In January, the index ranked 119 cities; it now ranks 134. Prague, where Robledillo lives, serves as the index's comparison point, with a permanent index score of 100.

Tokyo earns its No. 1 spot with a current index score of 237, showing that it is more than twice as expensive as Prague. The Japanese capital is the only top-10 city outside Europe or Australia. Following close behind it are Oslo, Geneva, and Zurich.

Australia is home to the next four most expensive cities—Sydney, Perth, Melbourne, and Brisbane—as well as No. 10 Adelaide. Rounding out the top ten is London, at No. 9.

Unlike other cost-of-living rankings, which are based on a few data points gathered by companies’ salaried employees and sold to customers, Expatistan's data is collected and shared publicly and freely on its website, It also differs from other similar lists in that it is not meant to gauge every factor of a city's finances, but rather the expenses that expats are most likely to incur. Thus, for instance, the monthly rent input asks for the average price of a two-bedroom furnished apartment in an “expat area of the city.”

The index shows that the greatest regional disparities are in Asia and Europe. In Asia, global financial centers Tokyo, Singapore (No. 11), and Hong Kong (No. 19) are several times more expensive than the cheapest cities on the continent, most of which are in India or Pakistan. And many Western European cities in the euro zone populate the top half of the index, while many Eastern European cities outside the European Union are among the cheapest ranked by the index.

The bottom of the list is made up of cities in these cheaper regions. Kolkata is last, with a score of 44—meaning prices there are half of those in Prague, about one-third of those in Seattle or Moscow, and just one-sixth what they are in Tokyo. Ranking slightly above Kolkata are several other cities on the Indian sub-continent: Bangalore (No. 132), Madras (No. 131), Karachi (No. 129), Delhi (No. 127), and Mumbai (No. 126). Two Ukrainian cities, Lviv (No. 133) and Kiev (No. 130); Cairo (No. 128); and Cluj-Napoca in Romania (No. 125) make up the remainder of the bottom ten.

Expatistan allows users to enter any two cities for comparison, generating short summaries such as, “Cost of living in Johannesburg is 30% more expensive than in Mexico City,” and full side-by-side comparisons of product prices in each city.

In Tokyo, for example, a pair of Levi's jeans is 144% more expensive than in Kolkata, cold medicine is 377% more expensive, and monthly rent for a furnished two-bedroom apartment is 1,250% more expensive.

Such side-by-side comparisons show differences even—or especially—between cities with similar rankings and in the same region. Kuala Lumpur and Bangkok are only separated by one point in the index, but the side-by-side comparison shows that food and entertainment are, respectively, 14% and 20% more expensive in Kuala Lumpur, while housing and clothing are 5% and 13% more expensive in Bangkok.

The index reveals that popular cities like Buenos Aires, with a score of 75, and Beijing, with a score of 83, are much cheaper than the middle-ranked city on the list, Berlin, which scores 129.

The most expensive North American city is New York, at No. 13, while the cheapest is Oklahoma City, at No. 99. Brasília (No. 25) tops Latin America, whose cheapest city is Lima (No. 122). In Africa and the Middle East, Riyadh (No. 12) is the most expensive, and Cairo is the cheapest.