In August 2011 UBS completed an update of their "Prices and Earnings" Survey - comparing prices and income levels across a number of major cities in the world. A section of the results are summarised below, and compare the cost of living in the major cities, excluding and including housing costs. In the table below, we have adjusted the figures so that Sydney = 0 - making it easier for Australian based comparisons.

These figures should only be seen as broadly indicative of price differentials, for the following reasons:

1. They are very dependent upon foreign currency movements - for example, the significant rise in Sydney's position on the table is largely a function of the recent strength of the Australian dollar.

2. These indices are difficult to put together in a constructive, balanced fashion - access to high resolution figures is really available only to large corporations through consultancies. In this context, the basket of commodities used to generate cost of living differentials is crucial. To provide an example, for many years Shell International used a basket of goods which were based on the consumption patterns of Dutch employees - the so-called "Amsterdam Man". Applying this consumption pattern in Asian environment was very expensive, and in fact most expatriate employees change their consumption pattern to suit the environment

3. We have a very real concern about the accuracy of the housing costs, and more particularly whether they reflect expatriate, rather than local requirements. Expatriates will choose housing with reference to certain amenties and concerns - proximity to schools, (good) hospitals, airports, shopping and security - which invariably lead to (relatively) high housing costs. This comment applies to many developing countries, where access to good quality housing in the "right" locations is invariably hard to acquire and expensive by any measure.