In this article, we will list and explore the 25 least affordable countries in the world. You can skip our detailed discussion and see the 5 Least Affordable Countries in the World.
The cost of living in a country can vary significantly due to a variety of factors, making some places notably more expensive than others. Economic conditions, real estate prices, taxation, the cost of goods and services, currency strength, regulatory environments, lifestyle preferences, geopolitical factors, and the level of infrastructure and development all determine why some countries are so costly to live in.
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Expensive Havens: Why Some Countries Demand More
Economically, countries with higher GDP per capita and average incomes often experience a higher cost of living due to increased demand for goods and services, which drives up prices. Inflation also plays a major role, as countries with high inflation rates tend to see continuous increases in the prices of everyday goods and services, further impacting the cost of living. According to the IMF, the projected outlook anticipates the world economy to sustain a growth rate of 3.2% throughout 2024 and 2025, mirroring the pace observed in 2023. Although there is a slight uptick expected for advanced economies, with growth forecasted to increase from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025, this will be counterbalanced by a modest deceleration in emerging market and developing economies, where growth is anticipated to ease from 4.3% in 2023 to 4.2% in both 2024 and 2025. Looking ahead, the global growth forecast for five years from now, at 3.1%, stands at its lowest level in decades. Furthermore, global inflation is predicted to gradually decrease from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025.
Real estate and housing costs are another major factor, especially in highly desirable locations where demand for property exceeds supply, leading to elevated prices. According to the Migration Policy Institute, the scarcity of affordable housing is rapidly evolving into a worldwide crisis. As per the UN special rapporteur on the right to adequate housing, approximately 1.6 billion individuals, constituting a fifth of the global population, currently endure inadequate housing and essential services. Alarmingly, projections suggest this figure could escalate to 3 billion by 2030.
Taxation and the provision of public services contribute as well, as high tax rates can result in increased prices for goods and services as businesses pass on these costs to consumers. Additionally, the cost of social services and welfare programs, funded by taxes, can add to living expenses. Other factors include the cost of goods and services influenced by import taxes, tariffs, and shipping expenses, as well as production costs such as labor and materials. Currency strength also factors in, as a strong national currency can make imported goods cheaper but may attract international buyers, driving up local prices. The regulatory environment, lifestyle preferences, urbanization levels, geopolitical stability, and infrastructure development all further impact the overall cost of living in a country.
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With this context, let’s move on to our list of 25 least affordable countries in the world.
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Methodology
To identify the least affordable countries worldwide, we analyzed the cost of living as our primary metric, supplemented by personal income tax rates as a secondary metric. Cost data for a single person, including expenses for housing, food, and transportation, was sourced from livingcost.org. Personal income tax rates were obtained from PwC and Trading Economics to assess the financial burden on individuals. Using these metrics, we aim to provide a comprehensive perspective on affordability, capturing both everyday living costs and the impact of taxation.
Note: We excluded Israel and North Korea from our list due to geopolitical tensions and the complex political scenarios in these countries.
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25 Least Affordable Countries in the World
25. Germany
Cost of Living: $1581
Tax: 45%
Germany offers a high standard of living, but it comes with a substantial cost. With a cost of living at $1581 and a tax rate of 45%, it remains one of the less affordable countries despite its strong economy and excellent public services.
24. Seychelles
Cost of Living: $1608
Tax: 15%
Known for its stunning beaches and luxury resorts, Seychelles has a cost of living of $1608. The tax rate is relatively low at 15%, but the high cost of imported goods contributes to its ranking.
23. Turkmenistan
Cost of Living: $1668
Tax: 10%
Turkmenistan’s cost of living is $1668 with a tax rate of 10%. Despite its rich natural gas reserves, the country remains less affordable due to limited economic diversification and high prices for consumer goods.
22. Austria
Cost of Living: $1743
Tax: 55%
Austria combines a high quality of life with a steep cost of living at $1743 and a significant tax burden of 55%. Its well-developed social services and infrastructure come at a high price.
21. Qatar
Cost of Living: $1870
Tax: –
Qatar’s cost of living is $1870 with no income tax. The country’s wealth from oil and gas industries drives up living costs, particularly for housing and luxury goods.
20. United Arab Emirates
Cost of Living: $1906
Tax: –
With a cost of living at $1906 and no personal income tax, the UAE is known for its high expenses related to housing, education, and healthcare, driven by its status as a global business hub.
19. Denmark
Cost of Living: $1923
Tax: 55.9
Denmark has a high cost of living at $1923 and one of the highest tax rates at 55.9%. Denmark has a stable and developed economy with a strong GDP growth rate. It is one of the most advanced economies in the world, with a high standard of living. The country’s generous welfare state and high wages contribute to its high expenses.
18. Norway
Cost of Living: $1924
Tax: 39.6%
Norway’s cost of living is $1924 with a tax rate of 39.6%. Known for its high wages and strong social security system, the country also has high prices for goods and services.
17. Netherlands
Cost of Living: $1945
Tax: 49.5%
The Netherlands has a cost of living of $1945 and a tax rate of 49.5%. The high standard of living and comprehensive public services come with significant living expenses.
16. New Zealand
Cost of Living: $1950
Tax: 39%
New Zealand’s cost of living is $1950 with a tax rate of 39%. Its remote location leads to higher prices for imported goods, contributing to its ranking.
15. Canada
Cost of Living: $2042
Tax: 33%
Canada’s cost of living is $2,042 with a tax rate of 33%. The country’s vast size and high quality of life contribute to these high living costs, especially in cities like Toronto and Vancouver, which are particularly expensive. However, more affordable living options can still be found in other areas across the country, but they may not offer the same amenities and opportunities as the major cities.
14. Vanuatu
Cost of Living: $2066
Tax: –
With a cost of living at $2066 and no income tax, Vanuatu’s expenses are driven by its remote location and reliance on imports for many goods.
13. United Kingdom
Cost of Living: $2183
Tax: 45%
The UK has a cost of living of $2183 and a tax rate of 45%. High housing costs, especially in cities like London, significantly impact overall affordability.
12. Luxembourg
Cost of Living: $2200
Tax: 42%
Luxembourg’s cost of living is $2200 with a tax rate of 42%. Known for its financial sector, the country also has high prices for housing and services.
11. Australia
Cost of Living: $2293
Tax: 45%
Australia’s cost of living is $2293 with a tax rate of 45%. High wages and strong social services are balanced by expensive housing and consumer goods.
10. Bahamas
Cost of Living: $2295
Tax: –
The Bahamas has a cost of living at $2295 with no income tax. The high cost of imported goods and luxury lifestyle contribute to its ranking.
9. Liechtenstein
Cost of Living: $2315
Tax: 22.4%
Liechtenstein’s cost of living is $2315 with a tax rate of 22.4%. Its small size and wealthy population drive up prices for housing and services.
8. United States
Cost of Living: $2433
Tax: 37%
The US has a cost of living of $2433 and a tax rate of 37%. While wages can be high, so are costs for healthcare, education, and housing. The USA has the largest economy in the world, driven by a combination of diverse industries, technological innovation, and consumer spending. Key sectors include technology, finance, healthcare, manufacturing, and agriculture.
7. Ireland
Cost of Living: $2438
Tax: 40%
Ireland’s cost of living is $2438 with a tax rate of 40%. Its booming tech industry has led to high housing costs, particularly in Dublin. Ireland is known as a tech hub, hosting the European headquarters of many multinational.
6. Iceland
Cost of Living: $2518
Tax: 35%
Iceland’s cost of living is $2518 with a tax rate of 35%. Its remote location and reliance on imports make everyday goods expensive. Iceland’s economy is diverse and resilient, with key sectors including fisheries, renewable energy, tourism, and technology. The country’s small, open economy has shown excellent growth, supported by a high standard of living and low unemployment rates.
5. Hong Kong
Cost of Living: $2614
Tax: 15%
Hong Kong provides an exceptional quality of life, highlighted by its extraordinary cityscape, top-tier healthcare services, and highly efficient public transportation system. However, it faces challenges such as high living costs and limited living space.
4. Switzerland
Cost of Living: $2896
Tax: 11.5%
Switzerland’s cost of living is $2896 with a tax rate of 11.5%. Despite high cost of living, the country’s sound economy, low crime rates, and stunning natural landscapes make it an attractive place for residents and expatriates.
3. Singapore
Cost of Living: $3000
Tax: 24%
Singapore has a cost of living at $3000 with a tax rate of 24%. Its status as a global financial hub drives up housing and living costs. While the high cost of living and expensive housing market can pose challenges, the country’s high salaries and excellent social services often offset these concerns, making it a desirable location for both residents and expatriates.
2. Cayman Islands
Cost of Living: $3374
Tax: –
With a cost of living at $3374 and no income tax, the Cayman Islands are known for their high cost of imported goods and luxury lifestyle. The financial services sector accounts for over half of the Cayman Islands’ GDP.
1. Monaco
Cost of Living: $6538
Tax: –
Monaco’s cost of living is a staggering $6538 with no income tax. The tiny principality’s opulent lifestyle and limited space drive up housing and living expenses. Monaco’s economy is robust, with key sectors including tourism, finance, real estate, and gambling.
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Disclosure: none. 25 Least Affordable Countries in the World is originally published on Insider Monkey.