The cost of living in New Zealand's largest cities has taken a tumble in the latest world rankings as other international cities climb the ranks.

This is the second year in a row Auckland and Wellington have fallen in Mercer's annual cost of living rankings - largely due to fluctuations in the currency, placing the country's most expensive city in 89th place and Wellington in 114th.

Auckland fell eight places in this year's survey, Wellington fell 13 places, while Hong Kong remained in the top spot claiming the title of the world's most expensive city.

Mercer's annual Cost of Living Survey measures the comparative cost of more than 200 items including; housing, transportation, food, clothing and entertainment, for expatriates across 209 cities around the world.


Hong Kong topped the list for the second consecutive year on the basis that the local housing market remained increasingly out of reach for many. Tokyo followed in second place, Singapore in third place, followed by the capital of South Korea, Seoul, Zurich in Switzerland and Shanghai.

Shanghai, Beijing and Shenzhen were ranked in the top, along with New York City in ninth place.

All cities in the Pacific region fell on the rankings. Australia's most expensive cities Sydney and Melbourne fell more than 20 places, with Sydney ranked in 50th place, down from 29th, and Melbourne in 79th.

Buenos Aires had the biggest drop, down 57 positions to 133rd place.

Currency fluctuations and a stronger US dollar were largely responsible for New Zealand and Australia's drop rankings this year. This country's low price movement and the rise of other main cities were also influencing factors, Mercer said.

"While the actual cost of living in the Pacific has not fallen, the exchange rate is a key factor when calculating expatriate packages. As a result, our major cities in both Australia and New Zealand are becoming increasingly attractive as locations for international businesses to send expatriates," Karla Costa, Mercer Global mobility leader for the pacific, said. "This is great news for our local workforce which will benefit from a richer, more diversified talent pool."

New Zealand's decline in rankings means it is now more expensive for local businesses to send employees to international markets.

Mercer chief executive Martin Lewington said New Zealand's decline in the ranking meant it would make Auckland and Wellington an attractive location for multinationals to set up a base in the Asia Pacific region.


"If [a business] is based in New York then New Zealand is a very attractive and lower cost place to locate your key people to."

Lewington said the rise of Asian cities becoming more expensive meant many multinational companies would look outside of Asia to set up an international base.