Every quarter AIRINC provides a useful data points update on our cost-of-living research including housing, goods & services, tax and research locations. This quarter’s cost of living research was conducted primarily in Europe, Asia, and mainland Southeast Asia.
Highlights from AIRINC’s in-depth research
RENTAL MARKETS AROUND THE WORLD
Bangalore, India [RISING]:
The rental market continues to be very dynamic. There is higher demand with limited availability of properties in tech-driven areas and the central part of Bangalore. Cost of living and interest rate hikes have impacted the rental market.
Hong Kong [RISING]:
Robust competition from arrivals from mainland China has changed Hong Kong’s rental market post-pandemic. Smaller properties in the best located buildings have seen the biggest increases, while the traditional high-end and larger properties on Hong Kong Island have not seen such noticeable rent hikes.
Paris, France [RISING]:
There is an extreme scarcity of all types of units, especially for those seeking a primary residence contract. These are the contracts which are regulated by the rent control laws which limit increases in rent and impose strict guidelines on when a lease may be canceled by the landlord. The new Energy Performance ratings are also causing scarcity as some older units can no longer be rented out and others are undergoing upgrades to windows, insulation, and heating systems that are taking months to complete.
Note: Most tenants will no longer pay taxe d'habitation.
Budapest, Hungary [FALLING]:
The strong demand and low supply witnessed last year and earlier this year stabilized and reversed in many cases for the market sector we target. Demand from the Ukraine conflict has noticeably dropped off, as has the strong competition from expats and students. Overall rents are down as a new supply of desirable properties has come to the market. Sources provided lower budgets and grid ranges.
Sources confirmed the local market reports and studies that rents across the country had spiked again since Q1 2023. Low supply was noted across the major locations we set. Rising interest rates for home buying pushes more people into rentals and enormous demand from the post-pandemic reopening of the country were key factors in the rent increases. Brisbane, Perth, and Sydney were among the cities where rents increased.
GOODS AND SERVICES UPDATE
Myanmar Fuel Shortage:
Myanmar is faced with fuel shortages as conflict worsens between the military and its opponents. Since October, more than 500,000 people have been displaced. The conflict has resulted in trade route disruptions at borders with China, India, and Thailand, causing shortages of necessities, including fuel.
Since the military seized power in 2021, the kyat has lost value against the U.S. dollar, making it increasingly difficult for importers to pay for fuel shipments. In Yangon, a city with a population of 8 million, people begin queueing at dawn to secure fuel. The Myanmar military is enforcing a cap to the amount of petroleum an individual can store or transport, with the goal to deter people from hoarding fuel and further depleting the supply. Anyone found with more than 180 liters will be fined $2,370 USD or be sentenced to a year in jail.
COUNTRY TAX UPDATE
The tax rate schedule was adjusted significantly, with the top rate reduced from 50% to 20%, in an effort to boost the economy. The net effect is a large decrease in income tax for all taxpayers.
Egypt enacted tax changes effective July 1, 2023. The tax brackets were adjusted, and the top marginal rate increased from 25% to 27.5% for taxable incomes exceeding EGP 1.2 million. The net effect varies by income level, with a decrease in tax for lower incomes and an increase for higher incomes. Social security is unchanged.
Egypt implemented a new “unified” payroll reporting platform, combining tax and social security withholding remittances across industries. The platform will have monthly, quarterly, and annual reporting submissions, and the platform will be implemented in phases beginning October 1, 2023.
On August 14, 2023, Egypt launched a new voluntary pension program for Egyptian citizens living abroad called "Maash Bokra" or Tomorrow's Pension. The pension scheme is administered by a state-owned insurance company in cooperation with the National Bank of Egypt. Eligible expatriate individuals can make voluntary contributions in USD to qualify for USD-denominated retirement benefits that vary depending on the accumulated contributions and the chosen retirement age. The program is intended to increase the country's foreign exchange reserves. Participants may elect to contribute annually with a minimum of USD 50 and a maximum contribution is USD 10,000. Participants must enroll for a minimum of 5 years. The tax implications are unclear, but it appears any contributions will not be deductible for Egyptian tax purposes.
Update as of January 6, 2024: The U.K. Autumn Statement was delivered November 22, 2023. This included an announcement that a reduction in the employee's National Insurance Contributions will be reduced by 2% effective January 6, 2024. Employer contributions are unchanged. The net effect of this change is a reduction in social security contributions. The annualized savings will be GBP 754 per year and will likely also apply to next year's 2024/2025 NIC contributions.