Earlier this year, Singapore was handed the dubious ‘honour’ of world’s most expensive city after the Economist Intelligence Unit’s (EIU) annual survey, which charts the expense of cities by comparing them to the cost of living in New York.
Singapore has retained this title for the past three years, even though Hong Kong and Zurich now trail closely behind in joint-second place. So, how exactly has Singapore managed to stay at the top?
In addition to the economic and geographic factors specific to Singapore, it can also be explained by currency fluctuations and falling commodity prices in other regions, which has forced an increasing number of investors to try automated trading to mitigate risk involved in hunches and spur of the moment investing decisions.
The world’s most expensive cities
Joining the top three in the EIU’s ten most expensive cities list are Geneva, Paris, London, New York, Copenhagen, Seoul, and Los Angeles. In contrast, the cheapest cities are Lusaka, the capital of Zambia, followed by Bangalore and Mumbai in India.
The results of 2015’s survey are quite different to a year ago, with researchers claiming that certain cities have come up against various economic factors, which range from the strength of the US dollar and weakness of the euro to falling commodity prices and geopolitical uncertainty.
“The stronger US dollar and weaker euro has pushed euro zone cities further down the ranking, especially as weak consumer sentiment and depressed commodity prices have undermined inflation in terms of both supply and demand,” the EIU said.
John Copestake, an editor of the survey, added: “In nearly 17 years of working on this survey I can’t recall a year as volatile as 2015. Falling commodity prices have created deflationary pressures in some countries but, in others, currency weakness caused by these falls has led to spiralling inflation.”
The reason for Singapore’s position at the top
Despite topping the charts, Singapore actually offers relative value in some categories, particularly when pitted against regional neighbours. When it comes to buying basic groceries, Seoul (33 per cent), Tokyo (26 per cent), and Hong Kong (28 per cent) are all more expensive than Singapore.
But in other categories, Singapore is consistently pricier for various reasons. The first relates to Singapore’s complicated Certificate of Entitlement system, which makes buying and running a car an extortionate exercise. In fact, transport costs in Singapore are 2.7 times higher than New York.
Second of all, Singapore has seen little to no cost-savings passed down from falling commodity prices, even though the government consumer association insist there are no anti-competition practices among oil companies. As a result, the price of clothes and public utility bills remains high.
Last, but not least, it is important to note Singapore’s unique geography, which has no cheaper suburban areas, as well as the earning power of city-dwelling residents and expatriates, something that has not been taken into consideration.
As long as these facts remain the same, you can expect Singapore to top the charts for many years to come.