SINGAPORE: Singapore is the 24th most expensive city worldwide for expatriates, according to the latest cost of living survey by ECA International published on Wednesday (Jun 7).
The country moved down six spots from last year's 18th position, falling out of the top 20 of the world’s most expensive cities. Angola’s Luanda topped the charts to become the most costly location globally for expatriates, followed by Hong Kong and three Swiss cities, namely Zurich, Geneva and Basel.
In the Asia-Pacific region, Singapore retained its position as the 10th most expensive city, coming in behind Hong Kong, Tokyo, Seoul, Shanghai, Yokohama, Nagoya, Osaka, Beijing and Busan.
A depreciation in the Singapore dollar against the greenback last year, which offset the rise in consumer prices, is the key reason why the cost of living in Singapore became relatively cheaper for expatriates than other global locations, said the firm’s Asia regional director Lee Quane.
“Our researchers noticed that prices in Singapore in local currency terms actually rose 1.75 per cent from 2016 to 2017. That should have meant a rise in Singapore’s ranking but when we converted the prices to US dollar for comparison purposes, several locations that were originally below Singapore, such as Norway’s Oslo and South Korea’s Busan, overtook Singapore primarily because their currencies have been stronger against the US dollar.”
The last time Singapore was out of the top 20 in ECA International’s was in 2014 when it was ranked 31st.
Since then, it saw a “considerable jump” in rankings and peaked at the 18th position last year as the Singapore dollar strengthened. Mr Lee said the drop in the latest survey merely “reflect a return to Singapore’s natural position out of the top 30 which it saw before 2014”.
ASIA RANKINGS “STRONGLY INFLUENCED” BY CURRENCY MOVEMENTS
Mr Lee noted that currency fluctuations similarly played a determining role in the rankings of other Asia-Pacific locations.
Malaysia’s Kuala Lumpur, for example, fell 15 spots to 212th out of 262 cities worldwide. Both George Town and Johor Baru dropped 10 spots to 245th and 250th, respectively, with Johor ranked as the region’s second-cheapest city to live in.
Ulaanbaatar, Mongolia’s capital and largest city, remains the cheapest location to live in for expatriates in Asia Pacific.
“For Malaysia, the reason for the continued fall in rankings is primarily due to currency weakness. The ringgit continues to weaken and some of it has already been offset by inflation which remains relatively high at around 5 per cent over the last 12 months,” Mr Lee said.
Also in Japan, while inflation levels remained stable over the past year, a weaker Japanese yen meant that the country became a slightly cheaper place for expatriates. Across the globe, Tokyo was the seventh most expensive city while other Japanese cities such as Yokohama (16th), Nagoya (17th) and Osaka (18th) slipped by four spots each.
By contrast, a stronger currency propelled Hong Kong up to its highest positions globally and across Asia. The city leapfrogged seven spots to become the world’s second-most costly location for expatriates, and overtook Tokyo as Asia Pacific’s most expensive city.
According to ECA International, Hong Kong has risen steadily in both the regional and global rankings since 2011.
“Hong Kong has continued to get more expensive for expatriates,” said Mr Lee. “Over the past few years, the Hong Kong dollar has appreciated against most major currencies, owing to its peg to the US dollar, which has pushed up the price of goods and services relative to those in locations (where) currencies have weakened against the greenback.”
Taiwanese cities have also climbed up the charts on the back of a stronger Taiwanese dollar, with Taipei and Kaohsiung being ranked 29th and 40th across the world.
But in Vietnam, high inflation of about 6 per cent, rather than currency movements, remains the key driver of the cost of living, said Mr Lee. Hanoi rose from 184th to 177th in ECA International’s latest survey, while Ho Chi Minh now stands at 182nd, up five spots from 187th.
CENTRAL LONDON FALLS OUT OF TOP 100 LIST
Elsewhere in the world, an increasingly overvalued currency drove Angola’s Luanda up seven spots to become the most expensive city this year.
Meanwhile, a weak British pound, which was hammered by last June’s Brexit vote, sent London down 67 spots to 132nd. For the first time in five years, London is out of the world’s top 100 most expensive cities, and is now cheaper to live in compared to its European neighbours such as Paris, and cheaper than even Bangkok, Rio de Janeiro and Buenos Aires.
Moving forward, the outcome of the UK elections on Jun 8 and the Brexit negotiations will hold sway over the UK cities’ rankings.
“In the short term, if the Conservative government wins by a landslide then that will probably give more confidence to the UK economy and you’re more likely to see some stability or even minor strengthening in the pound,” Mr Lee said.
“However, if there is a Labour victory, hung parliament or if the Conservative government wins a smaller majority, that will obviously weaken the government’s negotiating position in the Brexit negotiations or even reduce confidence in the UK economy. If the pound weakens, then the UK locations will probably continue to fall in our rankings,” he added.
ECA International, which has been conducting its cost of living survey for more than 45 years, compares a basket of like-for-like consumer goods and services commonly purchased by expatriates in more than 460 locations across the world. It conducts its survey twice a year.
Certain living costs such as accommodation rental, utilities, car purchases and school fees are excluded given that these are usually covered by separate allowances, it said.