Hong Kong getting cheaper for everybody, except residents

By SMBWorld Asia Editors | Jan 26, 2012

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The weakness of the US dollar is having a dramatic effect on the cost of living in Hong Kong, and the city is now cheaper than Singapore, Beijing and Shanghai, according to the latest Cost of Living Survey conducted by ECA International, a global provider of services for companies that send employees on international assignment.

The effects of this trend are mixed. While prices continued to rise over 2011 – by an average of over 7 per cent, ECA says – the peg between the Hong Kong and US dollars still makes Hong Kong cheaper than other cities in the region, and more attractive to companies seeking a location for their regional headquarters.

"While this is good news from the perspective of SAR's economy overall, it is not likely to be welcomed by ordinary Hong Kong people," said Lee Quane, ECA International's Regional Director for Asia. "They will see their costs going up and their purchasing power decreasing. They will also find themselves paying more for goods and services from outside Hong Kong."

Hong Kong's 26-place slide down the rankings of the world's most costly cities – from 32nd place in December 2010 to 58th place last month – is the biggest fall of any location in Asia. It forms a stark contrast to Beijing, up eight places to 35th on the back of rising costs and a stronger Yuan. Shanghai's position at 41st place is unchanged.

Living costs for assignees are affected by inflation, availability of goods and exchange rates, all of which can have a significant impact on assignee remuneration packages.

To help multinational companies calculate assignment salaries, ECA carries out a Cost of Living Survey twice a year, comparing the cost of a basket of consumer goods and services commonly purchased by assignees in over 400 locations worldwide.