Ever wondered which city is the most expensive in the world to live in? Well, you needn’t look too far.

According to The Economist’s 2020 cost of living index, Singapore is the most expensive city in the world, along with Hong Kong and Osaka (it’s a three-way tie for #1). Yes, we’ve actually overtaken notoriously pricey cities like New York and Zurich, which are #4 and #5 on the list.

What is the cost of living index?

Singapore’s official cost of living index is the Consumer Price Index (CPI), which is maintained by the Department of Statistics and tracks the prices of a fixed basket of goods over the years.

However, it can’t show you the cost of living in Singapore vs that of other countries. To do that, we have to turn to an international cost of living index such as The Economist Intelligence Unit (EIU)’s Worldwide Cost of Living study.

This twice-yearly study compares over 130 cities worldwide. To determine the cost of living in each city, the EIU looks at prices for 160 products and services, and the result is benchmarked against the cost of living in New York (formerly the most expensive city in the world).

Here are the top 5 most expensive cities in the 2020 cost of living index:

Rank

City

WCOL index (New York=100)

1 (tie)

Osaka, Japan

102

1 (tie)

Singapore

102

1 (tie)

Hong Kong

102

4

New York, US

100

5

Zurich, Switzerland

99

Is the cost of living in Singapore really that high?

The results of the EIU study might surprise us because the cost of living does not feel all that high, at least for Singapore citizens and PRs.

That’s partly because the EIU cost of living index focuses on expats and business travellers rather than residents.

It includes costs like rent and private schools, which are unlikely to impact locals. Other points of comparison, like food, clothing and entertainment, are also likely skewed towards a more upper-class lifestyle.

As Singaporeans, our cost of living is generally much lower than the study would suggest, because we can choose to live more simply and cheaply than the typical expat.

Also, we enjoy a tremendous amount of government subsidies across housing, healthcare and education, among others. 

Cost of renting or buying a house in Singapore 

Nonetheless, we do know that property is pretty expensive in Singapore. So how do we stack up?

The EIU does not publish this data, so we’ll compare prices using another cost of living source, Numbeo. Here’s what property prices look like across a handful of major cities around the world. We’ve bolded the more expensive ones for easy comparison.

City

Buy (per square meter in city centre)

Rent (1-bedroom apartment in city centre)

Hong Kong

US$32,036.50

US$2,328.59

Singapore

US$20,138.36

US$2,162.51

New York

US$15,726.28

US$3,394.82

London

US$14,263.04   

US$2,281.27

Paris

US$14,141.82   

US$1,371.42

Tokyo

US$11,408.89   

US$1,238.61

Cost of living comparison without housing

After removing housing costs, the cost of living in Singapore does go down quite significantly.

Essential expenses like food, groceries, transport (minus owning a car) and utilities are not too high in Singapore compared to other expensive cities. For example, according to the EIU report, a 1kg loaf of bread costs US$3.35 in Singapore, vs a whopping US$8.62 in New York.

We used Numbeo’s cost of living calculator to estimate the cost of living in each major city minus rent. These include groceries, public transport, utilities and leisure/going out in moderation.

City

Single (per month excl. rent)

Family of 4 (per month excl. rent)

New York

US$1,294.67

US$4,772.21

Tokyo

US$1,192.82

US$4,288.70

Paris

US$1,137.21

US$4,105.41

London

US$1,084.17

US$3,847.42

Hong Kong

US$1,027.28

US$3,637.76

Singapore

US$937.38

US$3,409.78

Are taxes high in Singapore? 

Personal income tax is generally very low in Singapore compared to most other developed countries. Here are the current income tax rates for annual incomes of up to S$100,000 in each of these cities:

City

Income tax rates

London

0% to 40%

Paris

0% to 30%

New York

10% to 22%

Tokyo

5% to 20%

Hong Kong

2% to 17%

Singapore

0% to 11.5%

There is a range in tax rates because income tax is usually tiered. Therefore, your total tax bill would depend on the amount you’re paid. But it’s safe to say most regular people in Singapore would pay no more than 5% in income tax, compared to 15% or more in many other countries.

In addition, Singapore does not have “wealth tax” such as capital gains tax or inheritance tax.

However, taxation is high if you buy property and/or cars in Singapore. There are multiple stamp duties for property transactions and annual property taxes, while car owners need to pay a hefty sum for COE, plus ongoing road tax and ERP.

There are also hidden taxes in our regular day-to-day consumption in the form of the GST, as well as high duties on tobacco and alcohol products.

Conclusion

So, is the cost of living in Singapore truly as high as it seems on The Economist’s cost of living index? Probably not!

Granted, the cost of housing, be it renting or buying private property, is definitely among the highest in the world. However, the lower cost of food, groceries, transport, utilities and income tax help balance things out.

Perhaps what’s more alarming is how sharply the cost of living has risen in the past years. A decade or two ago, Singaporeans would have laughed at the idea of being as expensive as New York or London — but look where we are now.

GoBear team

Brought to you by GoBear Insurance Broker (SG) Pte. Ltd., a registered insurance broker with the Monetary Authority of Singapore

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