Every quarter AIRINC provide 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. Read highlights below.
Highlights from AIRINC’s in-depth research
RENTAL MARKETS AROUND THE WORLD
Sources noted that higher asking rents this year are due to high demand and a very limited number of large apartments and houses. Many Americans have returned post pandemic restrictions and some companies are moving in from Hong Kong and China, creating new Asian headquarters in Tokyo. Along with new and returning expatriates, Japanese executive families are also competing for larger units in prime areas.
United Kingdom [RISING]:
Rents rose in the second quarter; vacancy rates remain low, and demand has increased from all sectors. The pace of rental inflation is slowing but rents are still up across the city. The situation is similar in most UK locations; Aberdeen rents increased as demand grows in an already tight market. New “green” laws in Scotland have also forced landlords to comply with the regulations which have had a knock-on effect on rent prices. Grimsby is up due to the increasing number of people moving to the area with a limited supply of quality housing.
Rents in Istanbul are up as the number of expatriates and people who were fleeing the war in Ukraine increased demand. Existing tenants are reluctant to move given the rapid depreciation of the lira (TRY) and rising rents in local currency.
GOODS AND SERVICES UPDATE
Over the past year the Argentine peso has lost roughly half its value. Confidence in the Argentine economy both at home and abroad is low as the country battles rising prices and an increasingly unsustainable debt burden. Government-reported annual inflation has been over 100% each month since February. Although Argentina is no stranger to economic turbulence, these are the highest inflation levels since the early 2000s when the country was in the midst of another economic crisis and a sovereign debt default which has impacted its financial standing for decades afterward.
Argentina is a major grain exporter and a historic drought has cut harvest numbers significantly. This reduction in exports has led to an attendant drop in foreign currency inflows and reserves in the country. The central bank is attempting to curb inflation and promote ARS accounts by raising interest rates, which are now at 97%, but these actions have not yet been enough to turn the tide. A deal with the International Monetary Fund signed during the previous administration is a divisive political issue and is in ongoing negotiations. The current president, Alberto Fernández, has announced that he will not run for re-election in October of this year.
Official currency exchange restrictions which limit the purchase of US dollars to $200 per month also mean that the parallel rate, otherwise known as the “blue dollar”, is an active exchange market. The blue dollar may be twice as high as the official exchange rate.
COUNTRY TAX UPDATE
Inflation indexing has been applied to tax brackets, credits, and thresholds. The social security has increased slightly. Quebec implemented tax rate reductions for lower incomes. The net effect is a small increase in social security and a decrease in tax for most taxpayers across Canada.
Canada has enacted an Under-used Housing Tax (UHT) on qualifying property owners to help ease the residential housing shortage. Owners impacted include Canadian non-citizens that do not have a permanent residence in Canada, qualifying trusts, corporations, and partnerships. Canadian citizens and permanent residents of Canada are exempt from UHT. The UHT is 1% of the property's value. Related legislation prohibits purchases of residential property by non-residents during 2023 and 2024. Toronto and Vancouver have implemented similar Vacant Home Taxes designed to impose taxes on individuals who own residential property that is left vacant. Exceptions apply.
The India government has passed the Finance Ace 2023 on March 31, 2023. The Act includes several significant tax changes applicable to individuals including a revised Concessional Tax Regime (CTR) that is now the default tax regime applicable for employees. The CTR includes updated tax brackets with a top marginal tax rate of 30%, an increased standard deduction of INR 50,000, a reduction in the surcharge for higher incomes under the CTR, and the elimination of most deductions. The maximum tax rate including surcharges and cess (also known as a surtax) decreased from approximately 47.9% to 43.7%. Social security (known as Employee Provident Fund or EPF) contribution rates are unchanged. The net effect of these changes varies by income level.