The big headline in the property sections of the online Australian newspapers today goes something like this:
You’d think that this would be an indication of the property market in Australia, and how we are still overpriced compared to the rest of the world.
That sounds reasonable, but you’d be wrong.
This is a survey that looks at cost of living expenses, but it does not include housing. So placing it in the “property” section of the newspaper seems inappropriate. This is a survey from the Economist Intelligence Unit’s Worldwide Cost of Living Survey:
Intelligence Unit researchers survey a range of stores: supermarkets, mid-priced stores and higher-priced specialty outlets. Prices reflect costs for more than 160 items—from food, toiletries and clothing to domestic help, transport and utility bills—in each city. These are not recommended retail prices or manufacturers’ costs; they are prices at the point of sale. Prices gathered are then converted into a central currency (US dollars) using a prevailing exchange rate and weighted in order to achieve comparative indices.
The survey compares over 400 individual prices across 160 products and services in 140 cities in 93 countries. The products and services included in the study include:
- Food items
- Domestic Help
- Utility Bills
Since it’s comparing to the US dollar, which is currently weak, changes in the value of a nation’s currency relative to the US dollar plays a big part in where it sits in the rankings. For examples, my own city of Brisbane went from 93rd to 14th in ten years because the Australian dollar went from 50 US cents to about $1.07. Here’s more information from the survey:
There are two major reasons why a city’s cost-of-living index will change over time: exchangerate movement and price movement. Since a common currency is required in making a comparative calculation, all local prices are converted into US dollars, which emphasises the role of currency movement. If, for example, a currency strengthens or inflation pushes up the price of goods, so the relative cost of living in that country will also rise.
Here’s the top 15:
- Osaka Kobe