In examining cities with the highest cost of living, the price of housing is generally the largest factor impacting these expenses. Rentals can vary hugely depending upon country, state, city or neighborhood. The national average rental price for a two-bedroom apartment in the United States tends to be around $1,000 per month, though in the world's most expensive cities you might not even be able to rent a closet for that amount. (Find out what you can do to find a fabulous apartment to fit your budget. See 6 Tips For Renting An Apartment.)
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The capital city of Japan has always been known for having an exceptionally high cost of living. Tokyo has held the top spot on the list of most expensive cities for housing rentals for a number of years with this year showing another increase in the average rental cost. According to the consulting group ECA, the average two-bedroom apartment in Tokyo costs $4,352 per month. These rates can be lower if you're flexible on the size of dwelling, location and amenities. Choosing to live in the suburbs can definitely save you money, but with that comes an increase in commute time and transit costs.
Russia's largest city takes the second spot on ECA's list of most expensive cities to rent a home. The average rental cost for a two-bedroom apartment is $3,500 per month. Perhaps it's not surprising that Moscow experiences such high rental costs since this European city is also known for being home to a large number of billionaires. Since the majority of Moscow's residents don't fall into the billionaire category, they certainly do face a particularly high cost of living.
Considering China's economic growth over the recent decades, Hong Kong has become a world center in terms of trade and commerce. Hong Kong took third spot on ECA's list of most expensive home rentals, with the average monthly cost of a two bedroom apartment coming in at $2,830.
If you've always wanted to live in posh London town, you'd better make sure you've got deep pockets first. ECA calculates that the average two-bedroom flat costs about $2,824 a month in rent. Because London is still a top location for business and commerce in Europe, this brings many expatriates to the United Kingdom each year, and like many of the cities on the top of ECA's list, space in London is at a premium with rental prices (and the size of rental spaces) reflecting this.
Another AsianCity finishes off ECA's top five cities. Singapore has become a popular business destination, and housing prices definitely reflect the influx of business people, workers and economic growth. A two bedroom apartment rents for $2,810 on average. (Here are three simple questions you should consider when weighing this decision. Check out Retirement Living: Renting Vs. Home Ownership.)
The United Arab Emirates has become synonymous with wealth over past decades, especially with the growth of Dubai as a major destination for business people and vacationers alike. However, it is Abu Dhabi, also a major city in the United Arab Emirates, that tops Dubai when it comes to the cost of home rentals. Both cities have seen a decline in rental prices over recent years. The garden city of the gulf is home to a large number of expatriates-and luckily for them, rents in this region are expected to continue to decline. As it stands today, most listings in Abu Dhabi for a two-bedroom unit of 1000 square feet come in at about $2,500.
Considering San Francisco's proximity to the Silicon Valley and many of the top technology companies in the world, it's no surprise that this city has a high cost of living - and there's also a lot of competition when it comes to landing good apartments. The average rental cost for a two-bedroom unit runs in the range of $2,100 per month.
Though Paris had formerly been found on the ECA's list of most expensive cities for home rentals, this famous city of romance has now fallen out of the top 10. Despite Paris' decline in the rankings, a two-bedroom apartment will still cost about 1,650 euros - that's about $2,390.
New York City
Who would have guessed that the financial mecca that is New York City wouldn't have made the top 10 on ECA's list? New York City comes in a modest 17th place on the list. This famous city is known as one of the most expensive places to live, though the fair market value for a two-bedroom apartment is currently estimated at $1,359 according to the Center for Housing policy. Comparatively, the fair market value for a two-bedroom apartment in Suffolk-Nassau on Long Island has been calculated at $1,592 per month. Though these rates are higher than the national average, they're still far more affordable than many of the cities falling into the top 10 on ECA's list. Keep in mind that the rental rate varies greatly depending upon which borough you're looking to rent a property in. Tribeca and Soho are among the most expensive in the Manhattan area, and Harlem is one of the least. Also, many apartments in Manhattan are rent-controlled as a method of keeping them more affordable.
The Bottom Line
Many factors impact housing prices - both for home purchases and rentals. Supply and demand may be one of the most important factors in determining pricing, though industry has a huge amount to do with it. As long as there's a certain amount of cachet associated with these locations and people continue to move to these cities to further their careers the prices will continue to hold. If you are planning a move to any big city, it's a good idea to investigate the rental rates in the area and know what you're getting into. Keep in mind that living in the suburbs and commuting into the city each day will almost always stretch your money further - though there are always exceptions when it comes to ultra trendy suburbs. Do your homework, because you'll definitely want to make sure that you'll earn enough to cover your expenses, or you might just want to consider finding a roommate. (Renting out your home can be a great way to ride out a real estate slump - if you do it right. Check out Top Tips For Successfully Renting Out Your Home.)
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