Published on : 31/Jul/2008

Sao Paulo in Brazil tops a new poll of the most unaffordable cities in the world. It has become more expensive faster than anywhere else on the planet according to the influential Forbes Group.

'Things there have become significantly more expensive, as the Brazilian Real has outperformed the Dollar, Pound and Euro, and the demand for housing, especially in the high end, has driven prices to new highs, the Forbes report says.

It may be more expensive to buy a property in New York, but in Sao Paulo it is increasingly more expensive to live, especially in prime areas.

The poll was compiled using data from Mercer's Worldwide Cost of Living Survey 2008. Forbes took the data and looked at the cities where the price index went up the most over the last 12 months.

Caracas, Venezuela, is second based on the fact that despite government subsidies and economic intervention food prices have increased 19% in the first half of 2008, more than double the food price inflation in developed economies like the US or UK.

Soaring inflation puts Tehran, Iran, third on the list. Even though the country is one of the world's largest oil exporters, mismanagement of the economy has lead to intermittent oil rationing over the last two years.

Brazil comes in again with Rio de Janeiro fourth on the list. It is followed by Warsaw, Poland, where 5% growth in gross domestic product, European Union subsidies, high remittance payments and increasing foreign direct investment along with the Zloty hitting a record against the Euro and a 15-year high against the US Dollar has sent the cost of living soaring.

Then in sixth place is Norway where wealth is driving up price inflation. When more wealth enters a country, residents demand better quality services and amenities and have the cash to pay for price hikes, the report says.

Manila, Philippines, comes in at seventh with housing and currency fluctuations the major factors. Constrained supply means that prices for international quality housing in places like Greenhills, Valle Verde or Corinthian Gardens have risen.

Although property prices are falling across Australia, Melbourne is widely tipped not to succumb to the global downturn and is listed at number 8. Real estate gross product is forecast to rise by 4.3% in 2008 and wage growth, business and government investment in the area are helping to increase wealth, resulting in better business returns, especially in retail, and higher prices.

Ninth is Istanbul, Turkey, which has become more expensive as the Turkish Lira has risen against most currencies over the past year. As a result, costs, especially in accommodation, have increased relative to Europe and North America.

Finally Perth, Australia's boom town, is tenth. Mining of natural materials is helping drive the economy with massive sales to China. The resulting influx of wealth and people has helped to transform Perth into one of the costliest cities in the world.