London remains the world's most expensive city to live in, according to a new survey which measures the cost of living in or visiting the world's top cities.

Figures from UBS Wealth Management Research, part of the Swiss investment bank, reveal the average Londoner renting a home now spends 23 per cent more than their equivalent in Zurich.

The UK capital also ranks highly in terms of the cost of visiting, coming in 26 per cent more expensive than New York. London is still less expensive to visit than Oslo (first) and Copenhagen (second).

To make matters worse, Londoners have a comparatively low purchasing power. Despite having the seventh highest wage levels in the survey of 71 cities, they rank only 26th in terms of what their salary buys them, and have 37 per cent less purchasing power than their counterparts in Zurich.

This is partially because London has a greater disparity of wages than many other cities, and has many low paid workers who live outside the city.

In the UBS survey, Oslo came out as the second most expensive city to live in, while Dublin leapt from being the world’s 13th most expensive in 2005 to this year's number three. Copenhagen is the fourth costliest, with New York at fifth.

Once renowned for being expensive, Tokyo has fallen from the fifth most expensive city to live in 2006 to eighth.

Chicago and Los Angeles feature lower down the list, at numbers 18 and 21 respectively.

The research also demonstrates that the sharp decline in the US dollar has made the US - and New York in particular - relatively cheap to visit. The Big Apple is now the 18th most expensive place to visit. Los Angeles and Chicago are the 28th and 29th most expensive cities for tourists.

European cities are now the most expensive to live in, according to the research. In 2006, Barcelona and Hong Kong cost around the same amount to live in. Now, the Spanish city is 22 per cent more expensive than the Chinese.

UBS highlights Dubai for its low tax and social contribution rates, helped by the United Arab Emirates' large oil reserves.

Caracas has also rocketed up the rankings of the world’s most expensive cities in the past year, and is now almost as expensive as Singapore as high oil prices have boosted the Venezuelan economy.

Indonesian capital Jakarta has the lowest wages of any of the cities surveyed, while inhabitants of Zurich take home the most cash.

In general, South American and South Asian cities are cheapest to visit and live in. Buenos Aires and Mumbai are almost identical in terms of cost of living - although the survey excluded the poorest parts of Mumbai. UBS Wealth Management said that prices in emerging markets cities often grew faster than wages, meaning that lower earning inhabitants of these cities have less purchasing power. Prices have grown much faster in the poorest cities - by 12.5 per cent - than in the richest quarter of cities, where they have gone up by around 3.9 per cent on average.

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