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London Heathrow Airport, Aug. 10

More bad news for London expats

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Reuters:  Oslo and London are the world's most expensive cities, while Zurich and Geneva residents have the highest buying power, according to a report released on Wednesday.

Europe dominates the list of 71 cities compiled by Swiss bank UBS, while Asian cities -- including Kuala Lumpur and Mumbai -- are among the cheapest places to live, based on the cost of a basket of 122 goods and services.

Oslo maintained its top position from 2005, while London rose three places to second.

Copenhagen, Zurich and Tokyo round out the top five, with New York in seventh place globally.

But London and New York are the most expensive cities when housing costs are included, said the 52-page report.

"It's no wonder that their residents often tolerate extreme commutes in order to find affordable housing," it said.

North American workers earn the highest wages, closely followed by Western Europe. But European net earnings are significantly lower because of higher taxes and social security contributions.

Total pay packets were biggest in Copenhagen, Oslo and Zurich -- but residents of the Nordic cities lose out when tax is taken into account.

"After statutory deductions, people living in the Swiss cities, Dublin and Los Angeles have the most left over from their wages," said the report.

London rose from 15th place to sixth in the gross wages ranking, but was only 20th in domestic purchasing power.

Kuala Lumpur was the cheapest city, followed by Mumbai, Buenos Aires and Delhi. Delhi was also among the bottom five cities in both the wages and purchasing power rankings.

Cities in eastern Europe and China were among the least expensive, while Asian cities have the longest working hours, with Seoul workers averaging 50.2 hours a week.

Workers in Asia also have the fewest vacation days, on average 12 per year, compared to a global 20 days.

"Western Europe, by contrast, is very attractive for employees who value their leisure time," the report added.