Cost of living drops in Australia, but locals don’t reap the benefits

Australian cities have fallen in rank in a cost of living survey, making them more attractive to expats and global companies. But local rental markets in Sydney and Melbourne show residents are still struggling to break into the property market.

Australian cities have fallen in rank in the 2014 Mercer Cost of Living Survey, making them more attractive to expats and global companies (AAP)

Australian cities have fallen in rank in a cost of living survey, making them more attractive to expats and global companies.

But local rental markets in Sydney and Melbourne show residents are still struggling to break into the property market.

The 2014 Mercer Cost of Living Survey shows Sydney has dropped from a ranking of 9 in 2013 to 26 in 2014.

Melbourne dropped from 16 to 33, with Brisbane and Canberra falling outside the top 50.

The Mercer survey covers 211 cities across five continents, measuring the comparitive cost of housing, transportation, food, clothing, household goods, and entertainment.

Changes in the value of the Australian dollar against the US dollar have been credited for the drop in the rankings.

However, the results of the survey do not mean that Australian cities have become cheaper for Australians.

"It does mean that in relative terms our Australian cities have become more cost competitive locations for companies to relocate expatriates too," Mercer's Garry Adams told SBS.

"So the business case to put those people in Australia has strengthened this year as our costs have come down."

Australian cities have been driven down the list due to the strengthening of the Chinese Yuan and currencies in Western Europe against the US dollar.

Rankings in some regions were impacted by recent world events and political and economic upheaval.

The most expensive cities, Luanda and N'Djamena are relatively inexpensive cities, but are quite costly for expatriates as imported goods come at a premium.

Rent rises in Sydney and Melbourne

A quarterly report from Australian Property Monitors shows that asking rents in Melbourne and Sydney have increased, while other capital city markets remained subdued.

Nationally, rental growth for units is outperforming houses in most capital cities.

"I think there's an affordability issue at play here," Andrew Wilson, Senior Economist at Australian Property Monitors told SBS.

"I think those 500 dollar a week rents we had for houses in Sydney for quite a while reflected that ceiling that incomes couldn't match the asking price for rents."

In Melbourne unit rents increased to a median of $370 per week with median asking house rents remaining flat at $380 per week.

In Sydney, unit rents have reached a peak of $500 per week.

Hobart also experienced strong growth in unit rentals but house rents remained flat in the city.

All other capitals saw flat or declining rents for houses and units.

Mercer Cost of Living Survey- Worldwide Rankings 2014

(Click image to enlarge)

 

Most expensive

1. Luanda, Angola
2. N'Djamena, Chad
3. Hong Kong, Hong Kong
4. Singapore, Singapore
5. Zurich, Switzerland
6. Geneva, Switzerland
7. Tokyo, Japan
8. Moscow, Russia
9. Shanghai, China
10. Beijing, China

Least expensive

1. Karachi, Pakistan
2. Windhoek, Namibia
3. Bishkek, Kyrgyzstan
4. Islamabad, Pakistan
5. Managua, Nicaragua
6. Kolkata, India
7. Cape Town, South Africa
8. La Paz, Bolivia
9. Johannesburg, South Africa
10. Tunis, Tunisia