Dublin cost of living same as London's: Irish prices 2nd highest in EU
Exchange rate changes have put the cost of living in Dublin at the same level as London's while data last month from Eurostat show Irish prices for a broad cross-section of consumer goods and services were the second highest in the European Union (EU), coming in at 125% of the average of the 28 member countries in 2016. With the exception of consumer electronics, Ireland was above the EU average for all the price categories surveyed.
Eurostat, the union's statistics office, said Ireland was highest in the EU for alcoholic beverages and tobacco (175% of the EU average), third highest for "personal transport equipment" i.e. cars, motor-bikes and bicycles (111% of EU average), fourth highest for restaurants and hotels and fifth highest for food and non-alcoholic drinks (both 120% of EU average).
Ireland is also now above average for clothing at 112% of the EU average prices. However, the EU overall, including Ireland, remains a lot cheaper than some non-EU European countries, with Switzerland, Iceland and Norway outstripping EU prices by a significant margin (see chart below).
Across the EU, price levels for consumer goods and services in the EU varied by almost one to three between the cheapest and the most expensive member state. Denmark was the most expensive of all highest at 139% of the EU average, while Bulgaria (48%) and Romania (52%) were the cheapest.
Eurostat uses purchasing power parities "to make it possible to produce meaningful indicators (based on either price or volume) required for cross-country comparisons, truly reflecting the differences in the purchasing power of, for example, households."
Dublin vs London
In March 2017 the Economist Intelligence Unit (EIU) published its worldwide cost of living survey of 133 cities and Singapore held its title as the world’s most expensive city for a fourth consecutive year.
The survey of 160 goods and services (including home rents) for use by human resources managers to calculate compensation packages for overseas expatriate postings has New York City as a base and prices were converted to US dollars at a September 2016 rate.
London had a 24th rank and Dublin was at 25th reflecting a fall in the British capital's index of about 10% in a year, following the decline in the value of the pound in the aftermath of the June 2016 Brexit vote on UK membership of the European Union.
London was at its lowest position in 20 years on the global cost of living rankings which have been published annually for 30 years.
According to the findings the British capital dropped from sixth in 2016 to 24th, a decline of 18 ranks and its lowest ranking since 1997 while Manchester dipped 25 places to 51st, the biggest plunge for any city included in the survey.
The change resulted in London being 17% cheaper than Paris for expatriates.
Paris was ranked at 7; Frankfurt at 23 and Brussels at 39.
The Savills Live/Work Index, produced by the British commercial real estate firm, tracks annual accommodation costs per worker (office space + residential accommodation) in 20 global cities and ranks London at 3rd and Dublin at a 12th ranking — the latest index was published in April 2017. Berlin got an 18th ranking.
Dublin prime office rents were 3rd highest in the 19-country Eurozone in the first quarter of 2017 according to Knight Frank — another British commercial real estate firm.
An Irish Times comparison for bankers with Brexit blues fleeing the City of London, of properties in Kensington and Chelsea in London with Blackrock in Dublin, show that prices are about double the Dublin rate but just 64 properties were put up for sale in Blackrock in the first three months of 2016, compared with 668 properties in Kensington and Chelsea.
Dublin rents rose by 13.9% in the 12 months to the end of March 2017 and are at 15% above the Celtic Tiger peak of 2008.
The average rent in South County Dublin was at €1,868 in March, compared with the average London rent, which fell to £1,519 (€1,796) in April 2017.
At the new Maple development of all-rental units, owned by a property REIT (real estate investment trust) in Sandyford, South Dublin, a 1-bed apartment is renting for €1,800 and the developer has not even provided the floor space in the ad. A 2-bed costs from €2,600 monthly — average Irish national earnings in 2016 were at €36,919.
The UK HomeLet Retail Index report (Page 8) in June showed an average rent of £1,881 in the Chelsea, Fulham, Hammersmith & Kensington borough.
The London Mayor's interactive rents map gives ranges for rents.
Last month Employment Conditions Abroad (ECA) which provides expat-related services to multinational firms and tracks 460 global locations, said:
UK cities have dropped as much as 68 places from last year in the latest global Cost of Living rankings — thanks to the weakened British pound. Central London is now 132nd in the world, down from 65th last year, the lowest ever recorded since ECA first began publishing the Cost of Living rankings over 10 years ago.
Edinburgh fell to 165th, Cardiff is now ranked at 175th and Belfast has dipped to 186th in ECA’s ranking.
Central London 132nd ranking is just above Addis Ababa, Ethiopia, in the global rankings, and has now been overtaken by Rio de Janeiro (88th), Bangkok (116th) and Dublin (120th).
Luanda, capital of Angola has risen from 8th position last year to top ECA’s global rankings this year while Swiss cities continue to dominate the global top 10 with Zurich 3rd, Geneva 4th, Basel 5th and Bern 6th. Hong Kong is 2nd; Tokyo 7th; Seoul 8th, Caracas 9th and Khartoum is at 10th.
The ECA says the comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Items included are:
Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables
Basic: Household goods; recreational goods; general services; leisure services
General: Clothing; electrical goods; motoring; meals out; alcohol and tobacco
ECA says certain living costs such as accommodation rental, utilities charges (electricity, gas, and water), car purchases and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.
Mercer, a US firm, which also provides expat services, in June published its latest annual survey which includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. New York City is the benchmark of the index in US dollars.
The costliest city, driven by cost of goods and security, is Luanda (1). Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Seoul (6), Geneva (7), Shanghai (8), New York City (9), and Bern (10). The world’s least expensive cities for expatriates, according to Mercer’s survey, are Tunis (209), Bishkek (208), and Skopje (206).
Zurich (4) is still the most costly European city on the Mercer list, followed by Geneva (7) and Bern (10). Moscow (13) and St. Petersburg (35) surged fifty-four and one hundred and seventeen places from last year respectively, due to the strong appreciation of the ruble against the US dollar and the cost of goods and services. Meanwhile, London (29), Aberdeen (146) and Birmingham (147) dropped twelve, sixty-one and fifty-one spots respectively as a result of the pound weakening against the US dollar following the Brexit vote. Copenhagen (27) fell three places from 24 to 28. Oslo (46) is up thirteen spots from last year, while Paris fell eighteen places to rank 62.
London's 29th rank is just behind Lagos and ahead of Brazzaville, capital of Congo.
In the Eurozone, Dublin is the most expensive after Paris at rank 66, just ahead of Bangkok.
Other Western European cities dropped in the rankings as well, mainly due to the weakening of local currencies against the US dollar. Vienna (78) and Rome (80) fell in the ranking by 24 and 22 spots, respectively. The German cities of Munich (98), Frankfurt (117), and Berlin (120) dropped significantly as did Dusseldorf (122) and Hamburg (125).
Kuala Lumpur, capital of Malaysia, has a 165th ranking on the Mercer list while Singapore to the south is at the 5th rank.
From my 10-years experience, the cost of a Western lifestyle in KL — rents, restaurants and so on — is much higher than suggested here.
While the Mercer rankings suggest a big gulf between London and Dublin, the Irish capital is still expensive compared with several significant European cities.
Eurostat detail on Irish prices
The EU statistics agency reports that Ireland in 2016 had the highest prices for alcohol and tobacco in the EU at 175% of the average. The next highest prices were in the UK (162%) followed at a distance by the three Nordic EU member countries — Finland (135%), Sweden (128%) and Denmark (122%). Lowest prices in Bulgaria (56%) followed by Hungary (67%), Poland (68%) and Romania (69%). The large price variation is mainly due to differences in taxation of these products among member countries;
Ireland was joint fifth highest (with Finland) for food and non-alcoholic beverages at 120% of the EU average. Highest prices were recorded in Denmark (148%), followed by Sweden (126%), Austria (123%), Luxembourg (121%) and lowest in Poland and Romania (both 62%);
Restaurants and hotel prices were also well above the EU average in Ireland in 2016 at 120% of the average or fourth highest in the EU. Prices were most expensive in Denmark (150%), Sweden (144%) and Finland (127%) and least expensive in Bulgaria (44%), Romania (53%) and the Czech Republic (56%);
Ireland was also above the average for clothing at 112%. Overall there was less disparity between prices for clothing in the EU with Sweden most expensive at 136% and Bulgaria lowest at 81%;
Ireland (111%) was joint third highest (with Finland) for the prices of personal transport equipment. Denmark (146%) was highest followed by the Netherlands (119%) while the Czech Republic (78%) was the lowest;
Ireland was on the EU average for consumer electronics (100%). In this area, prices were highest in Denmark (115%) and lowest in Poland (86%).
Standard of Living Indices
Paul McCartney of the Beatles sang "Money can't buy me love" more than a half-century ago, from the song "Can't Buy Me Love" — money certainly doesn't guarantee happiness but it helps.
Miserable people can be unhappy no matter how rich they are and when the Indian-born former board member of Goldman Sachs, the US investment bank and ex-head of McKinsey, the US consultancy, was imprisoned for insider trading it gave rise to the question: "Did millionaire Rajat Gupta suffer from billionaire envy?"
In recent times reliable data on both material standard of living in countries and well being are being published.
GDP (gross domestic product) per capita adjusted for inflation, was once viewed as a proxy for individual standard of living but according to Eurostat, Actual Individual Consumption (AIC) "is an alternative indicator better adapted to describe the material welfare of households."
In the US for example GDP per capita began to diverge from median family household income (where 50% are above and 50% below the mid-point) in the early 1990s (see chart above). It should be noted that the comparison here is between per capita and household data. Economists in a 2016 paper said that "median household income has lagged behind GDP per capita growth in most OECD (Organisation for Economic Cooperation and Development) countries, though generally less spectacularly so than in the USA. Second, a variety of factors have contributed to this divergence; there is not one universal explanation for the observed divergence. The decrease in household size, a largely neglected factor, is found to be the largest and most consistent contributor to the divergence."
AIC tracks consumption of goods and services whether public or private sector supplied, with an adjustment for price differences between countries.
In 2016 Ireland's GDP per capita was 77% above the EU average while AIC was 3% below, in line with Italy's level. Luxembourg is an outlier as part of its workforce lives in neighbouring countries. Ireland and Italy were 8% below the EA-19 (Euro Area) average.
OECD data for disposable income per capita net of taxes but including public transfers in US dollars in 2015, was at 26,600 for Ireland; Italy 27,900; UK 30,500 in 2016; Germany 36,200; Austria 34,300; 19-member country Euro Area 30,100; and the EU-28 average was 28,000.
The CSO plans to issue wellbeing indicators for Ireland in October 2017.
People in the Nordic Region appear to be the happiest with their lives according to Eurostat
Denmark tops 157 countries for happiness with Ireland at 19th and the UK at 23rd.Syria is at 156th and Burundi at 157th.
Over 325,000 Danes in an online survey said what made them happy — being happy does not suggest perfection and in early 2016 the Danish government was slammed for proposing confiscating cash and jewellery from war refugees. Ministers argued for equality: Danish citizens applying for public welfare can be forced to sell assets valued in excess of 10,000 kroner (€1,350).
Ireland and Denmark at 32,000 received the same number of immigrants from outside the EU in 2015 — 17% of the Irish population is foreign-born compared with Denmark's 11%.
The OECD's Better Life Index comprises 11 topics but it avoids a composite ranking for its member countries.
While a low British pound will make the UK cheap for tourists and investors, residents may see a return to declining real (inflation adjusted) wages, which was the experience for many workers in the years since 2007.
The Office for National Statistics (ONS) reported this month a version of consumer price inflation that includes housing costs known as CPIH. That rate dropped to an annual 2.6% in June from 2.7% in May, and also in June Mark Carney, governor of the Bank of England, cited "anaemic" wage growth as one of the reasons why he was not supporting a rise in interest rates.
UK inflation is still running ahead of average wage growth which is at 2% excluding bonuses.
The UK economy has had persistent deficits for years: trade and current account (Balance of Payments) deficits since 1998 and 1984 respectively while the UK has had an annual budget surplus on 8 occassions since 1945 — the last budget surplus was in 2001/2. See more here:
Eurostat data show that UK consumer prices in 2016 were the 6th highest in the EU.
Tourist numbers from the UK to Ireland in the year to May fell 7% compared with 2016 and the Central Statistics Office (CSO) has calculated that those who are coming are spending 20% less.
Poor standard hotels in Dublin typically cost at least €100 per room most of the year and The Irish Times reports that:
U2 fans in Dublin are paying 53% more hotel accommodation over the concert weekend — July 22nd — than fans in other European cities hosting the tour, according to research carried out by travel search engine Kayak.
The average nightly cost for stays in the city’s three- or four-star hotels is €201. Demand for hotel rooms in Dublin shows an increase of 46% when compared to any other weekend in July and a stay in the capital will cost visitors 28% more than the cheapest weekend of the month, which is July 28th-31st.
The industry avails of the low 9% VAT tax rate while staff are typically among the lowest paid in the workforce.
About a quarter of Ireland's population of 4.7m live in Greater Dublin and a dysfunctional property market that brought a boom and bust a decade ago is now a threat to Ireland's competitiveness.
UBS Price & Earnings — this is a biennial detail on not only the prices people have to pay for products in global cities but also how many hours work and net income are needed to buy items. UBS says:
The distribution of city rankings changes according to the reference goods being bought. Oslo, in the lower half of the table for buying bread, jumps to the top for rice. Workers there can afford it in one-eighteenth of the time that their counterparts in New Delhi require. For the iPhone, workers in cities such as Zurich and New York City require on average less than three days on the job to be able to grab one. In contrast, workers in Kiev must labor, on average, over 13 weeks to earn enough for the same phone. Workers in Buenos Aires cannot access official markets to purchase the iPhone 6 locally.
Pic on top: Source Pixabay