Worldwide terrorism continued to shake up stability, the report said.
"Sydney, for example, has fallen by four places, to move out of the 10 most liveable cities, owing to a heightened perceived threat of terrorism," it said.
"Those cities moving up the ranking are located largely in countries that have enjoyed periods of relative stability."
US cities are among those that had seen a drop in scores, and Paris also saw a sharp decline in its ranking because of the mounting number of terrorist attacks over the past three years.
The report noted that the world's biggest cities were not ranked highly and tended to be "victims of their own success".
"New York, London, Paris and Tokyo are all prestigious hubs with a wealth of recreational activity, but all suffer from high level of crime, congestion and public transport problems than are deemed comfortable," said the report.
Damascus, Syria's capital, was ranked as the least liveable city in the world.
Top 10 most liveable cities
1.
Melbourne, Australia
2.
Vienna, Austria
3.
Vancouver, Canada
4.
Toronto, Canada
5.
Calgary, Canada
6.
Adelaide, Australia
7.
Perth, Australia
8.
Auckland, New Zealand
9.
Helsinki, Finland
10.
Hamburg, Germany
(source: The Economist Intelligence Unit)
