Rental costs have been one of the biggest contributors to inflation, which has impacted both developed and developing economies. The housing market was first shaken due to the coronavirus pandemic. Lockdowns and work from home trends changed the industry dynamics. Researchers from the University of California in a freshly published research paper share that the relocation trends due to remote work indicate that workers who had previously worked in urban areas preferred to move to cheaper suburban areas if they were allowed to work remotely full time.
This shift also sees the workers move from high productivity cities to low productivity areas, but interestingly, it also features a classic illustration of the age-old adage of 'the grass is always greener on the other side.' This is because the researchers discovered that while workers in urban areas preferred a suburban environment, those in the suburban areas preferred the amenities of city life and moved to urban areas even though the rents were higher. A report from the National Bureau of Economic Research (NBER) also corroborates these conclusions, describing them as a 'donut effect' where city centers hollow out as people shift outwards to the suburban areas of the same cities. The NBER adds that in the post pandemic work environment, people will most likely follow a hybrid working model, where they commute to work for some days while staying home for others.
Researchers from Princeton, Georgetown, University of California, and Columbia share that this trend of well established and high income workers moving away from city centers is likely to affect the services industry since they often spend large amounts of money at these establishments. They share that rents in areas with high proportion of business service workers dropped in the wake of the pandemic, and this decline in rental prices started from March 2020 and persisted until January 2021. They add that this outward migration can also help drive down rents in city centers over the long term.
However, while the rents dropped until 2021 start, what happened next? Well, as expected, they went up. At least this is what a report from Knight Frank shows. Their report for the third quarter of 2022 shows that during the twelve-month period ending in Q3 2022, global prime rents grew by 10.2%, with London leading the charge through a 19% annual growth in Q3 which had nevertheless slowed down from the 27% growth in Q2. Overall, prime rental growth peaked at 11.9% in Q1 and ended up slowing down in the third quarter. Knight Frank's report for the fourth quarter says prime rent growth increased slightly to 10.3% with Singapore's rents growing by a whopping 28%. This six consecutive quarters of rental growth came after four quarters of consecutive drops, where prime trends dropped by as much as 5% during the fourth quarter of 2022.
The management of AvalonBay Communities, Inc. (NYSE:AVB) which has apartment buildings in cities such as New York and Washington D.C., shared during its earnings call for the fourth quarter of 2022:
After a very strong first half of the year, we ended 2022 with several of our key operating metrics, including occupancy, availability and turnover trending to what we consider more normal levels. In addition, following two years of abnormal patterns, rent seasonality returned with peak values being achieved during Q2 and Q3 before easing in the back half of the year. More recently, the volume of prospective renters visiting our communities increased in January as compared to what we experienced in November and December, which translated into a modest lift in occupancy, and we do see amount of available inventory to lease as we entered February.
Additionally, asking rents have increased about 100 basis points since the beginning of the year, which is beginning to flow into rent change. Based on signed leases that take effect in February, we’re expecting like-term effective rent change to be in the low-4% range. Turning to slide 13. The midpoint of our outlook reflects same-store revenue growth of 5% for the full year 2023. Growth in lease rates is driving the majority of our revenue growth for the year, which includes 3.5% embedded growth from 2022 and an expectation of roughly 3% effective rent growth for 2023, which contributes about 150 basis points to our full year growth rate. We expect additional contributions from other rental revenue, which is projected to grow by roughly 16%, about two-thirds of which is driven by our operating initiatives, a modest improvement in uncollectible lease revenue and a slight tailwind from the reduced impact of amortized concessions.
With these details in mind, let's take a look at some of the most expensive cities in the world to rent an apartment.
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Our Methodology
To compile our list, we used Numbeo's cost of rent index to pick cities that have the highest rents. Numbeo's data has been used by several publications such as Time Magazine and Business Insider and its methodology can be seen here.
30. St Helier, Jersey
Cost of Rent Index Score: 55.2
St Helier is a city in Jersey with a small population of 35 thousand people. It is the capital of Jersey and covers an area of 10.6 kilometers square.
Sydney is the most populous city in Australia and an economic hub in the country and houses a large number of multinational companies.
26. Raleigh, North Carolina, US
Cost of Rent Index Score: 56.4
Raleigh is the capital city of North Carolina which is the most populous city in the state. It is a logistics hub in the state.
25. St. Petersburg, Florida, US
Cost of Rent Index Score: 57.0
St. Petersburg is one of the smaller cities on our list with a population of a little over a quarter of a million people.
24. Tampa, Florida, US
Cost of Rent Index Score: 59.4
Tampa is a coastal city in Florida and it houses Florida's largest port responsible for most of the shipments through the state.
23. Charlotte, North Carolina, US
Cost of Rent Index Score: 59.7
Charlotte is the most populous city in North Carolina with a population greater than 800 thousand. It has one of the largest banking sectors in America.
22. Fort Lauderdale, Florida, US
Cost of Rent Index Score: 61.3
Fort Lauderdale is another coastal city in Florida. Due to its port, the city is known for its vibrant yacht industry.
Zug is a city in Switzerland that is one of the oldest on our list with a history dating back tens of thousands of years.
16. Zurich, Switzerland
Cost of Rent Index Score: 69.0
Zurich is the largest city in Switzerland which houses close to half a million people. It is also one of the most prosperous cities in the world and houses big banks and large financial firms.
15. Geneva, Switzerland
Cost of Rent Index Score: 69.0
Geneva is the second most populous city in Switzerland.
14. London, United Kingdom
Cost of Rent Index Score: 69.5
London is the capital city of the U.K., and is known to have some of the most priciest real estate in the world.
13. Seattle, Washington, US
Cost of Rent Index Score: 69.6
Seattle is an economic hub in Washington and houses several large technology and other firms.
12. Washington, D.C., US
Cost of Rent Index Score: 70.9
Washington D.C. is the capital city of the U.S. and is known for some of the highest living costs in America.
11. Miami, Florida, US
Cost of Rent Index Score: 72.1
Miami is an economic hub in Florida and has the largest cruise ship port in the world.
10. Los Angeles, California, US
Cost of Rent Index Score: 72.3
Los Angeles is one of the largest cities in the U.S. in terms of population and an economic and cultural hub.
9. San Jose, California, US
Cost of Rent Index Score: 74.2
San Jose is one of the largest cities in California and a technology hub with dozens of firms.
8. Oakland, California, US
Cost of Rent Index Score: 74.3
Oakland is a major port city in California and has one of the busiest ports in America.
7. Boston, Massachusetts, US
Cost of Rent Index Score: 75.2
Boston is the capital of Massachusetts and an economic and technological hub in the state and America.
6. George Town, Cayman Islands
Cost of Rent Index Score: 76.4
George Town is the capital city in the Cayman Islands with a population of a little under 35,000.
Switzerland has one of the highest costs of living in the world. Rent is only $1,633.64 but worldwide income tax can run up to 40%. You're even taxed for living in your own home. However, Swiss citizens at least enjoy purchasing power that's 12.1% higher compared to New York.
Switzerland has one of the highest costs of living in the world. Rent is only $1,633.64 but worldwide income tax can run up to 40%. You're even taxed for living in your own home. However, Swiss citizens at least enjoy purchasing power that's 12.1% higher compared to New York.
Singapore and New York City tied for the first rank amongst the world's most expensive cities in 2022, pushing Israel's Tel Aviv from the first place in 2021 to the third place in 2022. Both these cities had high inflation and a strong currency. Surprisingly, this is the Big Apple's first time atop the ranking.
As per the ECA International's Cost of Living Rankings 2023, New York City is the world's most expensive city to live in as an expat. The rising cost of rented properties and inflation are the primary factors behind New York City topping ECA International's latest Cost of Living Rankings.
The most expensive rental market in the US remains to be New York. The average monthly rent for a one-bedroom is roughly $3,260. This is about a $500 decrease from 2021, however as demand continues to increase prices are likely to follow.
Monaco is the most expensive country to live in, with a cost of living of $3,585 per month. Other expensive countries to live in include the Cayman Islands, Switzerland, and Singapore, all of which have a cost of living of over $2,000 per month.
The ten states with the highest cost of living are Hawaii, Massachusetts, California, New York, Alaska, Maryland, Oregon, Connecticut, New Hampshire, and Vermont. Hawaii is the state with the highest cost of living in the US, with a cost of living index of 184.
Many often believed it to be the most expensive in the world. Still, it wasn't until a report released in recent days by the Economist Intelligence Unit (EIU) that declared New York City to, in fact, be the most expensive city on the planet. It's official: New York City is the most expensive city in the world.
In its report, Niche also ranked the cheapest places to live in the U.S. At the top of the list this year is Brownsville, Texas. Brownsville has been steadily rising in Niche's Lowest Cost of Living ranking over the past few years, placing number six in 2021, number three in 2022 and finally, number one in 2023.
In general, the most expensive areas to live were Hawaii, Alaska, the Northeast, and the West Coast. The least expensive areas were the Midwest and Southern states. MERIC derives the cost of living index for each state by averaging the indices of participating cities and metropolitan areas in that state.
1. Hawaii. Hawaii is truly a paradise, but it is also the most expensive state in America to live in. The cost of living in Hawaii overall is 86% higher than the national average, and the cost of housing in Hawaii is a jaw-dropping 207% above the national average.
Basel ranks as the fourth most expensive city in the world according to the latest cost of living survey. The Swiss city has high prices for accommodation, restaurants, and markets.
Coming in as the cheapest state to live in in the United States is Mississippi with a cost of living index score of 83.3. It also has the lowest average housing costs in the nation at 33.7% below the national average. The median single family home costs around $140,818.
The study analyzed the U.S. Census Bureau housing data of more than 300 cities with a population of 100,000 or more and conducted a survey of over 1,000 people from around the country in November. Newark, New Jersey, has the most, with more than 79% of residents renting.
All the cities on this graphic are classified as severely unaffordable—and, for the 12th year in a row, Hong Kong takes the top spot as the world's most unaffordable housing market, with a score of 23.2.
To live comfortably in Hawaii, an annual income of around $70,000 to $100,000 for a single person, or $120,000 to $200,000 for a family is recommended. Is it expensive to live in Hawaii? Yes, Hawaii is known for its high cost of living due to factors such as housing, groceries, utilities, and transportation.
Mississippi. Mississippi tops this list as the cheapest place to live in the United States. It has the lowest housing costs of any state listed above and remains well below the national average in every other category.
Which City Is More Affordable: Los Angeles or New York City? Both NYC and LA are among the most expensive cities in both the U.S. and the world. However, the average cost of living in LA is also 24-27% lower than that of NYC.
Yes, it is generally considered expensive to live in New York City compared to many other cities in the United States and around the world. The high cost of living in the city is due to a combination of factors. Including high housing costs, taxes, transportation costs, and other expenses.
Is it expensive to live in Florida? Though the state has long had a reputation for being an inexpensive place to live, housing costs are high. Rents and sale prices are both well above national averages. However, the overall cost of living in the state is about on par with the national average.
While the most expensive rentals are unsurprisingly in New York City, several California cities are not far behind. San Francisco landed second on the costliest-rental list, with San Jose coming in at fourth and Los Angeles and San Diego taking the 6th and 7th spots, respectively.
Dubai is an expensive city compared to other UAE locales. Numbeo's cost of living index estimates that a single person in Dubai needs about 3,700 United Arab Emirates Dirham (AED), or $1,000 USD per month, excluding rent.
Known as 'The One Above All Else,' the lofty seven-bedroom apartment in New York City has made its mark as the tallest residential complex in the world and the most expensive, as it is currently on the market for $250million.
Cost of living and purchasing power related to average income. We adjusted the average cost of living inside the USA (based on 2022) to an index of 100. All other countries are related to this index. Therefore with an index of e.g. 80, the usual expenses in another country are 20% less then in the United States.
Overall, LA is about 24% less expensive than NYC. The cost of living in LA is lower than in NYC thanks to far lower housing prices. On average, housing in LA is 34% cheaper than in New York City. Additionally, prices for groceries, as well as restaurant prices, are lower in Los Angeles than in NYC.
Cost of Living Comparison Between Los Angeles, CA and London
You would need around 7,039.1$ (5,671.5£) in London to maintain the same standard of life that you can have with 7,100.0$ in Los Angeles, CA (assuming you rent in both cities).
So they may rent a place in New York City, London, and San Francisco to live in because it's much cheaper than buying. Since they have cash-flowing real estate and other investments to live off of, they know the difference between a property that is an expense and an income property.
Average Cost Of Living In Dubai Vs USA For A Family Of Four
The average cost of living in renting a place is 10.9% higher in Dubai compared to the US. For dining in restaurants, the prices in Dubai are 16.2% higher than in the major cities in the US.
Is Dubai Expensive? Yes. Dubai came in at number 31 in a 2022 Mercer survey ranking the cities with the highest cost of living in the world. However, Dubai is still more affordable than other famously expensive cities like Singapore, London and New York City.
Top 10 Most Expensive States to Buy a House in the US
The top 10 most expensive states for home values, according to the Zillow Home Value Index, include Hawaii, California, the District of Columbia, Washington, Massachusetts, Colorado, Utah, Oregon, New Jersey, and Idaho.
The penthouse nestled atop Central Park Tower is not only the highest in New York City but also the most expensive, with an asking price of $250 million.
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Introduction: My name is Ray Christiansen, I am a fair, good, cute, gentle, vast, glamorous, excited person who loves writing and wants to share my knowledge and understanding with you.
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