The most cost-effective cities around the world

Hannah Norton

May 2, 2023

With so many countries around the world experiencing a rise in food prices, gas, electricity, and the general cost of living; you might be wondering whether relocating to a different country will be easier on the wallet. Especially if you’re considering a location where property is more affordable and interest rates are still low.

After all, things such as home loan repayments and interest rates in any given area can be some of the biggest influencers on how affordable a city is to live in. That’s why if you’re looking to embark on a home loans journey, be it to purchase a new property or refinance your current loan to look for a better deal, you should consider Compare the Market’s Australian service. You can compare your options and search for a home loan that is suited to your circumstances, helping you on your way to securing lower living costs.

As experts in home loan comparison, we’ve looked at various factors around the world, including the cost of a grocery shop, inflation rates, apartment costs, average monthly salaries and more, to see where in the world is the most cost-effective. So, read on to discover where you could move to, to save yourself some money.

Table showing the world's 20 most cost-effective cities.

1. Houston, Texas, USA

In first place is Houston, most well-known for the Space Center, and its authentic Tex-Mex cuisine. However, if you’re looking to move somewhere more affordable, then it’s the city to be in.

An average grocery shop here will set you back by US$36.12, and the city has some of the lowest inflation rates, at 5%. Plus, with salaries fifth-highest on our list, at an average of US$5,407.64 a month, you’ll have plenty of additional money to save.


2. Bucharest, Romania

Bucharest comes in a very respectable second place. Whilst average incomes are low, at US$1,008.10, the cost of living Is low too – expect to pay around US$27.95 for groceries, US$142.67 on monthly utilities (the fourth-cheapest on our list), and just US$179.29 per square foot of property (the second-cheapest).


3. Chicago, Illinois, USA

It might surprise you to see that Chicago has placed so highly in affordability, but with the third-highest average monthly income, at US$5,727.36, you should be able to afford bills, with plenty of money to spare.

If you want to save as much money as you can in Chicago, then there are plenty of ways you can enjoy the city for free, such as people watching in Millennium Park, or enjoying a wander along the Navy Pier.


4. Phoenix, Arizona, USA

Phoenix makes it into fourth place, with inflation rates low at 5%, affordable apartment costs at US$212.46 per square foot, and average grocery shops of US$37.97.

Average monthly salaries in Phoenix stand at around US$5,324.42, but just like Chicago, there are lots of fun, free things to do in the city if you’re trying to save as much money as possible, such as hiking to the top of Camelback Mountain, and taking yourself on a self-guided art walk.


5. Dallas, Texas, USA

Rounding off our top five is Dallas, with cheap apartment costs, at US$230.14 per square foot, and high average monthly salaries, at US$5,049.75.

For fun, free ways to spend your time in Dallas, many of the museums have free admission days that you can check out, and you could also spend some time at the Pioneer Plaza Cattle Drive, for a true Texan experience.

The USA dominates the top 10 list, with Philadelphia and LA also making it into the top 10. Aside from Bucharest, other European cities that make it on top are Madrid, Napoli, and Barcelona.

The cities with the cheapest apartments

16-30%1 of weekly incomes are spent on rent in Australia, but in bigger cities, it can be much more than that. These cities are the most affordable when it comes to housing.


1. Lódz, Poland

Situated just two hours out of Warsaw, this central Polish city has the cheapest apartment costs, at an average of just US$130.81 per square foot of property. Based on the average Polish apartment size of 650 square feet,2 a flat will cost you a very reasonable US$85,026.

If you want to stay in the city centre, recommended areas include Nawrot and Brzezna, but if you’d prefer to move to the suburbs, then consider Julianowska, which is right next to a pretty park, complete with a lake.


2. Bucharest, Romania

Romania’s capital isn’t far behind – expect to spend around US$179.29 per square foot of an apartment, or around US$116,550 for an apartment, based on the average size of 650 square feet in Bucharest.3

The city centre and surrounding areas are a mixture of pretty Parisian-inspired apartments and brutalist communist blocks, but if you’re looking to move further out, Piata Romana and Floreasca Park are just a couple of neighbourhoods that are popular with expats.


3. Houston, Texas, USA

In third place is the Texan city of Houston, with a very reasonable cost of US$191.79 per square foot, or just over US$169,000 based on the average sized US apartment of 882 square feet.4

Pecan Park, and the Pleasantville Area are two of the more affordable areas that are less than 10 miles away from Downtown Houston. If you don’t mind moving further out, Westbranch is another affordable option, and is a 30-minute drive into the city centre.


4. Phoenix, Arizona, USA

Arizona’s capital comes in fourth place for affordable apartments, at US$212.46 per square foot, or US$187,390 for an average-sized apartment.

Deer Valley, North Gateway, and Ahwatukee Foothills have all been named as affordable yet safe neighbourhoods to move to. Ahwatukee is the closest to the city centre at just 14 miles away, and is right by the South Mountain Park and Preserve. North Gateway is further out, at a 30-minute commute to downtown Phoenix, but you’re close to Lake Pleasant Regional Park, which is a great spot for hikes and picnics.


5. Dallas, Texas, USA

Rounding off our top five is Dallas, with a square foot of property totalling US$230.14, or around US$282,985 for a typical sized American apartment.

Known for its vibrant arts and music scene, and its iconic NFL team, the Dallas Cowboys, the city is a great place to live. For affordable housing, Wilmer and Mesquite are both great options, and are less than a 20-minute drive out of downtown Dallas.

The other American city to make it into the top 10 cities for most affordable housing is Philadelphia, at around US$303.66 per square foot of property. The cheapest place in Australia is Adelaide, at US$296.28 per square foot; with Zagreb, Budapest and Warsaw also all making it into the top 10.

The best cities for cost of living, based on grocery costs, utility prices and apartment costs.

The cheapest cities for cost of living

If you’re looking for cheap grocery shops, then Lódz tops the list, at around US$19.15, with Birmingham coming in second place, at US$20.43. In fact, European cities dominate the top list, with Krakow, Riga and Warsaw all making the top five.

Alternatively, if you’re looking for cities that have the cheapest utility costs, then it might surprise you that Stockholm – a city often considered to be expensive – has the lowest average costs, at just US$124.66. Bulgaria’s capital, Sofia, isn’t far behind, at US$134.42; with Seville, Bucharest, and Valencia making up the top five.

Stephen Zeller, General Manager of Money at Compare the Market states: “With the cost of living continuing to soar and many people struggling to pay for everyday items, it makes sense that many of us are wondering whether the answer is to move abroad to a more affordable city, when you can get more for your money.

“If you’re looking for a home loan to support you in securing a new home, then it’s always a good idea to compare your options. The cost of property in any given location can vary significantly based on the property’s features, and comparing home loan deals available to you can help you look for an option that is most appropriate for the property you’re after.”





This dataset ranks 50 different cities across the USA, Europe, and Australia, based on how cost-effective they are. To do this, 6 different factors were used. Once the data for the factors was collected, the factors were then normalised, to provide each factor with a score of between 0 and 1. The normalised values were then summed, to give each city a total score out of 5. The cities were then ranked from highest to lowest, based on their total scores. The factors used are as follows:

  • Average Income – Average monthly net salary, after tax.
  • Income Tax Rate – The maximum personal income tax rate of the country the city is located in.
  • Average Utility Cost – Average monthly utility cost for electricity, heating, cooling, water, and waste disposal, for a 915 sq ft apartment.
  • Average Grocery Cost – The combined cost of the following food products: Loaf of bread, gallon of milk, 12 eggs, 1 lb of cheese, 1 lb of chicken, 1 lb of beef, 1 lb of apples, 1 lb of bananas, 1 lb of oranges, 1 lb of tomatoes, 1 lb of onions, 1 lb of potatoes, 1 head of lettuce.
  • Average Apartment Cost – Average cost per sq ft of an apartment in the city centre.
  • Inflation Rate – The inflation rate of the country the city is located in.


  • Average Income – High values get a high score. Low values get a low score.
  • Income Tax Rate – Low values get a high score. High values get a low score.
  • Average Utility Cost – Low values get a high score. High values get a low score.
  • Average Grocery Cost – Low values get a high score. High values get a low score.
  • Average Apartment Cost – Low values get a high score. High values get a low score.
  • Inflation Rate – Low values get a high score. High values get a low score.


Data gathered is correct as of 14/04/23. Where data wasn’t available “-” was used and a score of 0 was given.