The Burrow
Feb 25, 2025
As living expenses continue to rise worldwide, the cost of living has become one of the most important considerations for people deciding where to live, work or invest in property. From housing affordability and utility costs to public transport fares and everyday living expenses, the true cost of city life can vary dramatically depending on location.
To see which cities are hit hardest, the home loan comparison experts at Compare the Market analysed major cities across Australia, the United States and Europe, to offer a data-driven snapshot of where living costs are most manageable, and where they are placing increasing pressure on household budgets.
Canberra ranks as Australia’s most affordable city in 2026, driven by a high median household income of AU$122,200 and stable house price growth. While median house prices remain relatively high, strong earnings and reasonable public transport costs help offset housing expenses, making Canberra one of the best cities to live for income-to-cost balance.
Wollongong combines significant house price growth with comparatively moderate living expenses. Affordable meals (AU$23, the lowest in the index), strong public transport infrastructure and lower daily costs help balance housing pressures, positioning the city as an increasingly attractive option for buyers priced out of Sydney.
Darwin’s low median house prices are boosted by solid median incomes and steady annual price growth. While utilities can be more expensive, particularly electricity at 30.1 c/kWh, overall living expenses remain balanced by income levels and relatively affordable transport.
Just missing out on the top three, Geelong has some of the lowest median house prices in the index at AU$581,000. Combined with low electricity rates, inexpensive meals and reasonably affordable petrol costs, what really sets Geelong back is the high price of public transport.
Townsville offers moderate house prices and solid incomes (AU$89,284), though higher transport costs and the second-highest electricity cost on the index, 33c/kWh, place some pressure on budgets. Despite this, it remains one of the more affordable Australian cities overall, particularly for households seeking lower entry prices into the housing market.
Sydney continues to sit at the higher end of the cost of living spectrum, driven by a combination of expensive housing – with a median house price of almost AU$1.24 million – and elevated day-to-day expenses. Transport, dining and other routine costs add to the financial load, making it the most challenging city for households to manage living expenses.
Strong demand in Perth’s property market has reshaped the city’s affordability profile. Although everyday costs such as transport remain relatively contained, sustained growth in housing prices (15.5%) are narrowing the affordability advantage the city once offered, particularly for first-home buyers. And if you needed a caffeine hit? Well, at AU$5.92 it’s the most expensive place to get a coffee.
Adelaide’s affordability has come under pressure as housing costs have climbed faster (at 12.2%) than household earning (AU$80,236, the index’s lowest). While property prices remain lower than in many capitals, slower income growth means housing is taking up a larger share of household budgets, reducing overall financial flexibility for residents.
Brisbane’s rising housing market (with 13.7% annual house price growth), alongside comparatively high petrol prices (AU$1.87 per litre), has made the city more expensive for residents. Even with stronger income levels, the overall cost of living has increased, limiting the city’s affordability appeal for those relocating.
Melbourne’s cost of living pressures continue with annual house price growth sitting comparatively low at 5.1%. At AU$852,000 for a typical Melbourne home, property prices are lower than other cities in the index but it doesn’t help that transport costs are quite high, for both public transport and petrol costs.
Sioux Falls stands out for how consistently low costs align with relatively strong earning potential, with a relatively high average income per capita of US$73,959. Housing, transport and everyday expenses remain well contained, giving residents greater purchasing power compared with many larger US cities.
A combination of accessible housing and stable income levels underpins Des Moines’ affordability. With core household costs such as utilities and commuting kept relatively low, the city continues to offer a cost-effective lifestyle, boosted by a low household debt-to-income ratio of 1.16%.
Jackson’s affordability is shaped by its relatively low house prices (US$203,788) and manageable transport cost of US$1.50 for a one-way journey. Although some household expenses sit higher, overall living costs remain competitive compared with many US cities.
Wichita maintains its affordability through comparatively low property prices and restrained day-to-day expenses. This balance has helped position the city as an appealing option for households prioritising manageable living costs. Moderate electricity costs (14.73c/kWh) and one of the best household debt-to-income ratios on the index (1.06%) contribute to Wichita’s affordability in our index.
While the average income in Louisville is certainly not among the highest in the US (US$57,526), lower food expenses and comparatively affordable house prices (US$269,223) help offset the cost of living, resulting in a more balanced affordability profile.
Honolulu continues to sit at the extreme end of the affordability scale, where elevated housing costs (averaging out at US$838,674) are compounded by higher prices for food, transport and services. The city’s location adds to these pressures, leaving residents with some of the highest everyday living expenses in the country. The cost of electricity, coffee, milk and the debt-to-income ratio all top our index.
In Los Angeles, housing affordability – the most expensive in the index at US$942,799, remains a major challenge, with the cost of getting around and routine expenses adding further strain. Even before discretionary spending is considered, essential costs account for a significant share of household income.
Portland’s cost pressures stem less from housing alone and more from the cumulative impact of daily expenses. Higher prices for meals and transport reduce affordability, despite property costs that sit below those of many large US cities. It’s one of the most expensive places to fill up your tank, too, at US$1.06 per litre.
Seattle’s strong job market and higher wages are increasingly offset by its cost of living. Expensive housing (US$733,309, on average), alongside high transport (US$3 for a one-way journey), milk and gasoline costs, continues to limit affordability for a large proportion of residents.
Rising housing costs in Portland have been accompanied by higher transport expenses and tightening household budgets. With incomes growing more moderately, overall affordability has declined in recent years, with an inexpensive meal costing an index-topping US$27.50, tied with that of Portland, Maine.
Warsaw ranks as Europe’s most affordable city in 2026, driven by a strong alignment between housing costs, utilities and everyday expenses. While income levels sit below those of Western European capitals, lower property prices (€218,891 for a two-bed house is among the lowest on the index) and efficient public transport mean residents retain more disposable income for daily living.
Vilnius combines moderate housing costs with efficient, affordable public transport, contributing to its strong affordability ranking. These factors help balance household expenses, particularly for residents relying on public services rather than private transport. Eating out is reasonable, while the price of petrol (€1.46 per litre), is the second cheapest on the index.
Bratislava benefits from relatively low housing costs (€320,450), which play a central role in maintaining affordability. Although transport costs are higher than some regional peers, lower property prices help limit the overall financial burden on households, as do food costs (€10 for an inexpensive meal), and milk and coffee prices.
Budapest continues to offer one of the most accessible cost of living profiles in the EU. Affordable housing, alongside reasonably priced public services and transport, helps keep essential expenses manageable for residents, even with the index’s lowest average annual salary (€15,756).
Ljubljana’s affordability is shaped less by housing alone and more by consistently low ongoing expenses. Utility and transport costs remain comparatively modest, helping offset moderate property prices and supporting a lower overall cost of living. Food, coffee, milk and petrol are all at the lower end of the spectrum.
Zurich sits at the top of Europe’s cost of living scale, where very high property prices (€1,486,887 for a two-bed house) are reinforced by expensive utilities and services. Although average salaries are among the highest in Europe, the cost of maintaining a household means a significant portion of income is absorbed by essential expenses.
Copenhagen’s affordability challenges extend beyond housing alone. Elevated property prices are compounded by high public service costs and fuel prices (€1.93 a litre for petrol), increasing the overall cost of day-to-day living and reducing disposable income for residents.
Oslo’s high wages are offset by the broader cost structure of living in Norway. High household debt levels (an index-high of 246.8%), alongside expensive housing and services, place ongoing pressure on household budgets despite strong earning potential.
London continues to struggle with affordability as housing costs remain among the highest in Europe. Combined with expensive public transport (€3.99 for a one-way journey) and everyday living expenses (at €22.81 it’s the third-most expensive place to eat out on the index), even higher salaries often fail to translate into greater financial flexibility for residents.
Amsterdam’s affordability has been shaped by persistent housing shortages and rising rental and purchase prices. When combined with increasing living costs across transport and services, this has made the city less accessible for many households. Debt is high (215.8%), as are petrol costs (€1.97 per litre, the highest on the index).
Stephen Zeller, General Manager of Money at Compare the Market Australia, explains how cost of living pressures continue to vary depending on where people live.“Our index shows that affordability can look very different from one city to the next. Cities like Canberra, Sioux Falls and Warsaw perform well because housing, utilities and transport costs are more closely aligned with local incomes. On the other hand, places such as Sydney, Honolulu and Zurich place significant strain on household budgets due to high housing and everyday living expenses.
“What this highlights is that no city is universally ‘cheap’ or ‘expensive’ – it’s the combination of housing affordability, utility costs and transport expenses that ultimately determines how far your income goes. Comparing your home loan options remains one of the most effective ways households can manage their living expenses, particularly when housing costs are taking up a growing share of income.
“In many cases, a small change in the interest rate of your loan can make a difference in thousands of dollars over the life of a loan. By comparing what options are available to you, you can look for one that benefits you based on your personal priorities.”
Australia:
This dataset ranks 13 cities in Australia, based on their cost of living, using 9 key factors. Each factor’s data was collected and normalised to a score between 0 and 1. Median house price was weighted twice as heavy as any other factor. These scores were then combined to give each city a total score out of 100, and cities were ranked from highest to lowest. Factors include median house price, annual house price growth, median annual household income, electricity rates, transport, food/meal costs, and petrol.
All Australian data is in AUD.
United States:
This dataset ranks 51 cities across the US, using 10 key factors including typical house price, average income per capita, interest rates, household debt-to-income ratio, transport costs, groceries, and gasoline. Data was collected from reliable sources such as Zillow and state-level income data. The factors were normalised on a scale from 0 to 1, and cities were ranked from highest to lowest. Median house price was weighted twice as heavy as any other factor.
All US data is in USD.
European Union:
This dataset ranks 25 cities across European countries based on 10 key cost of living factors. These include 2-bed house price, average annual salary, interest rates, electricity costs, and the cost of living indices, with all factors normalised to a score between 0 and 1. Median house price was weighted twice as heavy as any other factor. Each city’s data was weighted to generate a comprehensive cost of living index, which allows for comparisons across Europe.
All European data is in Euros.
All data is correct as of 12/12/25. The ranking data shown is a compilation of multiple data sources and may not be representative of real life. All data is accurate with regards to the sources provided. Exchange rates used: 1 USD – 0.85 EUR.
Sources:
To see our 2025 index, click here. To see our 2024 index, click here. To see our 2023 index, click here.