Hong Kong is world’s second most expensive location globally: study

New York City takes the top spot as rents soar, whilst Hong Kong’s property demand fell.

Hong Kong is no-longer the world’s most expensive location in the world thanks to weakening demand in its housing market, according to the latest cost of living study by ECA International.

Hong Kong has been named the second most expensive location in the world, with New York City claiming the top spot as rents in the US city soared.

“Like many places in the world, prices of day to day goods and services rose in Hong Kong at a rate well above those we have seen in recent years, and above the average rate of growth elsewhere in the Asia region,” said Lee Quane, Regional Director – Asia at ECA International.

“However, demand for rental accommodation has weakened on account of Hong Kong’s ongoing sub-par economic performance, causing rents to fall and contributing to Hong Kong’s fall of one place in our ranking,” Quane noted.

Geneva in Switzerland closed the top 3 of most expensive locations based on cost-of-living. It is followed by Tel Aviv, London, San Francisco, Zurich, Singapore, Seoul, and Moscow, in that order.

Asian cities fall
In Asia, 65% of surveyed locations fell in the global ranking, as inflation in the region were not as high compared to other locations in the world.

In China, a weaker yuan and relatively low rates of inflation have resulted in all surveyed cities in China dropping, with Guangzhou and Shanghai falling out of the global top 10 in 2022.

“Low rates of inflation relative to other locations worldwide, alongside a weaker currency has made locations in mainland China relatively cheaper this year,” said Quane. “Although prices have risen in Chinese cities meaning that living costs are higher in 2022 than they were in 2021, cities have nonetheless fallen in our rankings as prices have risen at a faster rate elsewhere.” 

Meanwhile, Taipei moved down 11 places to 30th in global rankings.

Singapore is a notable exception. The Lion City’s cost-of-living was noted to have risen significantly, leading it jump four places and enter the top 10 at the 8th spot. This was majorly due to a significant increase in rental costs in 2022, according to ECA International. 

The city’s relatively high rates of inflation in day-to-day goods and services in comparison to recent years also contributed to the rise.

“The biggest driver of Singapore’s rise in our rankings has been a double-digit increase in rental costs in 2022,” said Quane. “The COVID-19 pandemic impacted the supply of accommodation coming to market and demand has increased significantly as the city has opened its borders once again. This may be a short-term shock but nonetheless, it has been responsible for Singapore’s current position as one of the ten most expensive locations worldwide.”

Tokyo, meanwhile, is out of the top 10 in 2022 after ranking 3rd in 2021. Nagoya also fell 49 places to 87th place, below Brussels and Rome. This was due to the Japanese yen depreciating by 20% year-on-year against the US dollar.

Karachi remains Asia’s and the world’s cheapest city as high rates of inflation were offset by its weaker currency. 

ECA International’s study is based on surveys that compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 490 locations worldwide. ECA’s accommodation data is also considered, with the study comparing rental costs in areas typically inhabited by expatriate staff in over 420 locations worldwide.