Tel Aviv Dethroned as World’s Most Expensive City, but Cost-of-living Crisis Remains

Last year, Israel’s financial capital climbed five rungs to score the top slot, beating out such urban centers as Paris, Singapore, Zurich, Hong Kong and New York to become ‘the most expensive city in the world to live in’

Samuel Sokol is a freelance journalist based in Jerusalem. He was previously a correspondent at the Jerusalem Post and has reported for the Jewish Telegraphic Agency, the Israel Broadcasting Authority and the Times of Israel. He is the author of Putin’s Hybrid War and the Jews.
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Tel Aviv, 2021.
Tel Aviv received the grim award of most expensive city in the world last year.Credit: Eyal Toueg
Samuel Sokol is a freelance journalist based in Jerusalem. He was previously a correspondent at the Jerusalem Post and has reported for the Jewish Telegraphic Agency, the Israel Broadcasting Authority and the Times of Israel. He is the author of Putin’s Hybrid War and the Jews.
Sam Sokol

After climbing to the top spot last year, Tel Aviv is no longer the world’s most expensive city, according to the Worldwide Cost of Living Index released Wednesday.

Tel Aviv has given up its top spot to New York and Singapore, which tied as the most costly places to live, according to the Economist Intelligence Unit’s index – an annual report comparing prices in over 170 major cities across the globe, widely considered the most accurate ranking of its kind.

Last year, the Israeli financial capital climbed five rungs to score the top slot, beating out such urban centers as Paris, Singapore, Zurich, Hong Kong and New York to become “the most expensive city in the world to live in.”

However, “the combination of these two factors – high incomes and a stronger exchange rate – has propelled Singapore and New York City to the top of our WCOL rankings for 2022, making them the most expensive cities in the world,” the EIU reported, noting that “a stronger currency and a higher inflation rate have enabled these two cities to push Tel Aviv, which was top in the rankings last year, into third place.”

Taking a panoramic view, the EIU found that “prices have risen by an average of 8.1% in local-currency terms over the past year in the world’s biggest cities,” which was “the fastest rate for at least 20 years, reflecting a global cost-of-living crisis sparked by the war in Ukraine and continuing COVID-19 restrictions in China.”

Tel Aviv’s rise to the number one slot last year came down to Israel’s “soaring currency and price increases for around one-tenth of goods in the city, led by groceries and transport, in local-currency terms," according to the EIU, as well as increasingly expensive property prices, “especially in residential areas.”

Goods and services such as alcohol, transportation, personal care items were notably expensive in Tel Aviv in 2021, with the city ranking “in the top third for all ten of our major spending categories, with its index score up by 5 points since last year,” the EIU said at the time.

In response to the ranking, left-wing Israeli activist group Standing Together last year launched a campaign to increase the country's minimum wage from 28.49 shekels an hour to 40, arguing that topping the cost-of-living index was "further proof of the intolerable situation in Israel."

“The problem is not only that consumer goods cost more here than they do in New York and Singapore, but that salaries here are half what they are there,” the organization said. “The disgraceful minimum wage of 5,300 shekel per month means that hundreds of thousands of workers and their families live in poverty, and that the middle class barely makes ends meet.

Last summer, in its 2020 survey of the European housing market, accounting firm Deloitte found that Tel Aviv was the second-most expensive city to live in among 62 European cities in 2020, after Paris, which fell to second place in this year’s EIU ranking.

A 70-square-meter home (roughly 750 square feet) in Israel costs the equivalent of 9.2 years average salary, seven more months than last year, the Deloitte report estimated. By that measure, Israel was the fifth-costliest country in which to buy a house, after Serbia, the Czech Republic, Slovakia and Austria.

In 2020, the average price for a house in Israel was 4,052 euros (4,784 dollars) per square meter, but in Tel Aviv, it was 10,322 euros, a rise of 5.6 percent from 2019. The data also showed that Israelis paid more for mortgages than in most European countries.

Prices on many items in Israel are significantly higher than the OECD average while Israeli salaries are lower than the average. Figures released by the organization in 2020 showed that in 2019, prices in Israel were 19% higher than the average for 36 countries surveyed. However, some Israeli economists believe that local prices may not be as high compared to other developed countries as has long been thought.

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