The Burrow
Aug 14, 2025
As the cost of living continues to shape major life decisions, such as where we live, work, and invest, it’s never been more important to understand where your money goes the furthest.
To provide a clearer global affordability comparison, the home loan comparison experts at Compare the Market AU have compiled the Affordability Index 2025 – a ranking of 44 countries that reveals the most and least affordable places to live, based on key work-life balance factors such as income and taxation, housing, utilities, transport, and cost of essential goods and leisure.
Whether you’re eyeing an international move or simply curious about how your home country stacks up, our latest data delivers a clear-eyed look at global affordability in 2025.
With an impressive Affordability Index score of 71.27, Brazil takes the top spot as the best country for affordability in 2025. Despite a relatively low average income of AU$11,634, Brazil stands out thanks to affordable accommodation and transport costs, helping it outperform wealthier nations.
Public transport costs just $1.40 per trip, and weekly grocery expenses average only $54.42, making Brazil particularly appealing to digital nomads, retirees, and professionals seeking a better work-life balance.
At the opposite end of the spectrum, Iceland ranks as our least affordable country, with a score of just 34.40. Despite an average income of $29,336, residents face steep costs across nearly every spending category.
Grocery costs average $195.50 per week, while leisure expenses climb to $300.11, the second highest of all countries surveyed. Getting around isn’t much cheaper, with public transport costing $8.09 per trip and petrol priced at $3.88 per litre, both the highest rates in the index.
Iceland also sits at the top for housing and utility costs, making daily life considerably more expensive relative to income.
Other high-cost countries include Portugal, Switzerland, Denmark, and the Netherlands. These nations often offer high salaries, but they’re equally matched by elevated costs in housing, utilities, and transportation, creating a less forgiving financial landscape.
Portugal, for instance, is often associated with a lower cost of living, yet ranks among the more expensive countries due to rising housing and goods prices outpacing average wages. Meanwhile, Switzerland avoids the very bottom of the index thanks to higher post-tax earnings ($39,196) that better balance out their cost burdens.
Looking to live well without breaking the bank? These ten destinations top the list as the best affordable countries globally, based on their high Affordability Index scores. From low-cost housing to budget-friendly transport, they show how far your money can really go.
Romania offers one of the most balanced cost-to-income ratios in Europe. With an average income of $9,042, residents benefit from low housing, utility, and transport costs, making everyday life more affordable without sacrificing essentials. This strong value-for-money makes Romania a standout for budget-conscious professionals and remote workers.
Indonesia and India excel in affordability for everyday living, topping the table for transport, utilities, and leisure costs, despite lower average incomes. These countries are particularly appealing for digital nomads and remote workers looking to reduce day-to-day expenses without sacrificing lifestyle.
South Korea offers a compelling mix of low housing (91.5 OECD house price index) and utility costs with excellent yet affordable transport infrastructure, making it a standout in East Asia.
Luxembourg and Canada may not seem like cost-effective destinations at first glance, but both countries benefit from higher average incomes ($47,692 and $33,504 respectively) that help offset living expenses.
Australia ranks 18th overall in Compare the Market’s 2025 Cost of Living Index, with an Affordability Index score of 58.01. While it doesn’t make the top tier of the cheapest countries to live in 2025, it remains a strong contender. Australia offers one of the highest average incomes ($32,420) alongside a mixed cost profile across housing, transport, groceries, essential goods and leisure, and utilities.
Although the OECD house price index is relatively low (122.4), buying properties remains expensive due to high mortgage interest rates (6.30%).
Other living expenses vary. Internet and public transport are among the most expensive compared to other countries while grocery and leisure costs sit around the mid-range, with electricity and petrol costs on the more affordable end.
Australia combines high income with manageable living costs, offering a strong quality of life, though housing affordability remains a challenge for many potential homebuyers.
Housing affordability varies widely around the world, influenced not just by property prices but also by mortgage interest rates. Countries like Finland, Brazil, South Africa, and Indonesia offer some of the most affordable housing, thanks to a combination of lower house price indices and more accessible borrowing rates.
Finland balances modest home values with low interest rates, earning one of the highest housing affordability scores.
In contrast, countries such as Portugal, Hungary, Türkiye, and Iceland face significantly higher housing costs. Portugal has one of the highest OECD house price indices, while Türkiye’s mortgage rates sit near 40%, making home ownership significantly less attainable.
Leisure costs, such as entertainment, fitness, and dining, also differ greatly across countries. India and Indonesia offer the best value, with average leisure expenses under $55, while Colombia, Brazil, and China also provide affordable options in this category.
On the other end, countries like Switzerland, Iceland, and Denmark rank among the priciest countries for leisure, where everyday activities come at a premium. Switzerland tops the index, with average leisure spends reaching $319.40.
Interestingly, Portugal, despite its high housing costs, offers relatively low leisure expenses, helping to ease some of the financial pressure for residents and visitors alike.
Compare the Market Australia’s General Manager of Money, Stephen Zeller, notes the impact cost-of-living can have on your personal finances.
“Whether you’re relocating overseas or simply reassessing your finances at home, there are ways to ease cost-of-living pressures and avoid paying more than you need to,” Mr Zeller said.
“For everything from your groceries to your home loan, comparing what’s on offer can lead to real savings.
“If your mortgage is eating into your income, it may be time to refinance and potentially secure a better deal.”
Using data from 44 countries around the world, Compare the Market AU created the Cost-Effective Countries Index 2025, assessing affordability across five key categories that represent essential aspects of everyday living. Each category was scored out of 10 based on relative affordability, and a country’s final score was calculated using a weighted average across all categories. Higher scores reflect greater affordability.
The five cost-of-living categories used in the index include:
Each category is normalised and scored out of 10, based on relative affordability or cost. A country’s final Affordability Index score is calculated by averaging these category scores, using a customisable weighted scoring system that reflects the greater importance placed on high-impact categories such as housing and income.
All values were converted into AUD using a fixed exchange rate of US$1 = AU$1.52 to ensure consistency across countries. The index is designed for flexibility and comparability, making it suitable for highlighting affordability across different lifestyles and regions.