For the last seven years, Deutsche Bank have been performing an annual survey of global prices and living standards across the globe. This is compiled into a rather fascinating (and often humorous) report on 50 cities relevant to global financial markets, and this year’s edition by DB strategists Jim Reid and Craig Nicol (Mapping the World’s Prices 2018) is no different.
These reports are noteworthy because prices are a real-life microcosm of global economics: data and news and policy are shaken and stirred together, and prices are the resultant reality we taste daily. Another interesting aspect is that the researchers go beyond cold hard numbers to compare the quality of life of places, which helps to moderate the ’grass-is-greener’ mentality that may be encouraged when looking at prices alone.
In this article we share some highlights of the report, in particular the top 5 ’best and worst’ cities in terms of salaries, rent, affordability, and overall quality of life. We also look at where South Africa ranks on these lists, and conclude the article with some fun facts.
Highest and lowest disposable income - after rent
You may earn more in the US, but you’ll also be paying more in rent! To get a better idea of a city’s affordability, it may be more helpful to look at disposable income. The report ranks cities in terms of disposable income after rent (they assume two people are working and sharing).
Best and worst cities for quality of life
Even disposable income doesn’t give a full picture of what life is like in other cities. The report goes further and ranks cities according to quality of life, by taking into account consumer purchasing power, regional crime and safety, overall quality of health care availability, general cost of consumer goods, housing affordability, traffic congestion and commute times, overall pollution, and regional climate likeability. Here are the top five best and worst cities for quality of life:
Best balance between affordability and quality of life
So which cities rank the highest in terms of quality of life AND disposable income? Only four global cities make the top 10 in both categories:
Where does SA rank?
Cape Town is ranked 27th according to quality of life (a drop of nine places compared to 2017) due to poor safety, weak purchasing power and long commuting time. Johannesburg is ranked 30th (a drop of four places since last year) with poor safety, poor health care, long commute times, and pollution pushing down the ranking.
In terms of salaries, Cape Town is ranked 34th and Johannesburg 31st. Rent is still more expensive in Cape Town (34th) than in Johannesburg (36th). It makes sense then that disposable income is greater in Johannesburg (30th) than in Cape Town (33rd).
What is worrying from this latest report, however, is that emerging market cities in general remain much cheaper than more developed cities. The writers of the current report note that over the seven years of reporting, the gap between the two has actually been widening, rather than closing. This is likely due to the persistent weakness in emerging market currencies, especially over the last year, amongst other reasons.
- Oslo, Melbourne, Sydney, Auckland and Dubai charge the highest prices for cigarettes and beer.
- A bottle of Coca-Cola is the priciest in Oslo, and cheapest in Istanbul.
- Moscow has the cheapest internet in the world.
- Helsinki is the most expensive place to hire someone to clean your house.
- Milan is the cheapest place in the world to buy a cappuccino.
- London’s public transport is the most expensive.
- The US, Hong Kong and Japan are the cheapest places to buy Apple products, but Brazil, Greece and Denmark have the most expensive iPhones in the world.
Deutsche Bank. Mapping the World’s Prices 2018. Published 22 May 2018. London.
Natalie Mayer is an independent writer and editor with 12 years’ experience. She has a B.Com in Economics (UCT) and a Master’s in Sustainable Development (University of Stellenbosch) and has worked for a number of high-profile clients, such as the United Nations Educational, Scientific and Cultural Organization (UNESCO), Nedbank, the Sustainability Institute, Counterpoint Asset Management, Pearson Education, and of course, Sharenet - to name a few. Natalie has written and edited research papers, textbooks, print and online articles, and website content on a vast array of topics, including finance and money matters, education, property, social and environmental issues. She is passionate about communication that meets the needs of the audience, and her particular strength is to bring clarity to text.