- Luxembourgers and Swiss have the highest purchasing power
- Disparity between developed and emerging countries increasing
Zurich and Geneva top the list of world’s most costly cities, ahead of New York, according to a study by UBS Group AG.
It costs a Zurich family of three more than $3,600 a month to live, based on a basket of 122 goods and services that doesn’t include rent, the report shows. Geneva comes second at $3,500 per month, followed by New York on $3,340.
On Jan. 15, the Swiss central bank surprised investors by scrapping its currency ceiling, boosting the franc to a record high against the euro. That helped Zurich and Geneva leapfrog Oslo, which was the most expensive city when UBS last published the survey in 2012.
“The Swiss National Bank’s decision to remove the cap has moved prices a lot,” Daniel Kalt, an economist at UBS said in an interview in Zurich on Thursday. “Switzerland would probably be shortly below New York City in terms of prices without the shock.”
When rent is included, the U.S. city jumps to first place as a two-bedroom unfurnished apartment averages $4,320 a month compared with $2,390 in Zurich. That compares with living costs of $1,273 for a family in Kiev, the least expensive city, where a family pays rent of about $540.
Despite those expenses, the highest salaries in the world mean the inhabitants of Zurich and Geneva rank second and third to the residents of Luxembourg in terms of enjoying the greatest purchasing power, UBS said.
The average Zurich resident makes above $41 per hour before tax, 21 times more than a person working in Kiev. The cost of living excluding rent is only 2.8 times higher, while the rent is 4.4 times above the one in the Ukrainian capital. The salary of a Zurich employee lets him or her buy an iPhone 6 in less than 21 hours, while in Kiev 627 hours of work are required to obtain the Apple Inc. device.
“The developing economies had been catching up over 30 years, but with the depreciation we’ve seen in the emerging markets the purchasing power has again declined in the last three years,” Kalt said. “Some of the goods consumed in Kiev will need to be imported. The poorer the country the more it has to import goods and the worse is the hit from the depreciation of their currency.”
The high prices also mean that the Swiss cities are among the most expensive to visit. In Geneva, Zurich, together with New York and Tokyo, a one-night city break costs at least $1,000 for two people, excluding transportation, according to UBS. That’s almost four times the cost of visiting Bucharest.
The residents of Zurich need to work about 80 hours for a day of holiday, just one hour above the Bucharest level, but 27 hours more than Moscow employees. In Shanghai, it takes 293 working hours for an employee to get one day of holiday, according to the UBS study.