As expensive as our big cities are to us here in Canada, they’re kind of a bargain on a global scale.
In the recently issued 2023 Mercer Cost of Living survey, Toronto ranked 90th out of 227 cities, Vancouver 116th, Montreal 135th, Ottawa 137th and Calgary 145th. Nineteen US cities are more expensive than the five Canadian cities in the survey, as are a swath of cities in Europe, Asia and the Middle East.
“The cost of living is certainly higher in those locations, even relative to the most expensive places in Canada,” said Gord Frost, a partner with the Canadian arm of Mercer, a global HR and pension consulting company. “Everyday costs like food are more expensive. Housing is more expensive. Transit is more expensive.”
In a way, so what? What matters is the cost where you live, not in the cities you may at most visit briefly. But a global perspective does tell us something important. If we consider our cities to be world class, then we’ll need to adapt to the high costs that go along with that distinction. The affordability of yesteryear, particularly in housing, is not coming back.
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People adapt to mega-expensive cities like Hong Kong, New York, San Francisco, Seoul, London and Tokyo by either living outside the city or accepting that they’ll live in smaller homes.
“The mindset is different,” Mr. Frost said. “People don’t expect to live in three- or four-bedroom detached homes in Singapore, or in London, Paris or Zurich. They expect to live in a flat or a much smaller space.”
Canadians got used to bigger houses because we had the land to build them. We’re running out of room in urban areas, which is one of the reasons why housing prices have soared over the years. But there is still a big is the best mindset that, ideally, everyone in a family gets their own bedroom, that every kitchen should be big enough to have an island and that every house should have a sizable backyard.
Frustration about the high cost of living has been building in the past year, but Canadian cities are falling in the Mercer cost of living ranking. Toronto was down one spot from 2022, Vancouver fell by eight spots, Montreal by 10, Ottawa by five and Calgary by four. In the United States, meanwhile, all cities in the survey went up in the ranking compared to last year.
US cities are in a much higher league of unaffordability than Canadian cities in the Mercer ranking. New York ranked sixth overall, Los Angeles 11th, San Francisco 14th, Boston 21st and Chicago 24th. Detroit and Cleveland ranked 80th and 88th, respectively.
Mercer’s ranking is based on the cost of more than 200 items in each city, including housing, transportation, food, clothing, household goods and entertainment. The data is meant to be used by employers in setting compensation for international employees. Other cost of living surveys have ranked Toronto and Vancouver much higher for housing or living costs.
Mr. Frost said that Canada is seen globally as an attractive place to live for both cost and quality of living reasons. In the last Mercer ranking of cities by quality of living, from 2019, Vancouver came in third, Toronto 16th, Ottawa 19th, Montreal 21st and Calgary 32nd out of 231 countries. Vienna ranked first.
Canada’s comparatively strong scores on measures of cost and quality should placate no one who is angry that they can’t afford groceries or housing. But these scores do give us a sense of what’s realistic in assessing the cost of living.
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Our housing costs seem astronomical compared to incomes, food prices have soared and the overall inflation rate remains too high despite more than a year of interest rate hikes. But we haven’t been uniquely victimized here in Canada by these problems. They’re global, affecting cities around the world.
On housing in particular, we need smarter, more aggressive actions to address affordability. The lethargy of government in getting more homes and rental units built is maddening.
But expectations matter, too. Canada’s big cities are part of a global community where owning a detached home with a big yard is a luxury. As they’ve done in the 89-plus cities that are more expensive than Toronto, Vancouver, Montreal, Ottawa and Calgary, we can adapt.
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