Canberra has moved from 47th place to 34th place in the annual ranking of the world's most expensive places to live.
And Australian cities now rank ahead of London, New York, Rome, Los Angeles, Berlin or Hong Kong, the latest survey by the Economist Intelligence Unit finds.
Sydney globally is ranked at No.7, slightly ahead of Melbourne at No.8.
Perth is the 13th most expensive place to live in the world, Brisbane is 14th and Adelaide is 18th.
The report's editor, Jon Copestake, said the cost of a loaf of bread in Sydney had almost doubled in the past 10 years, while petrol had risen threefold.
He placed the blame for the high cost of living on the strong Australian dollar.
Local price inflation, especially last year, has also played a part, he said.
When the survey was last conducted in June, four of Australia's cities were in the top 20.
Mr Copestake said a city's desirability as a destination could also affect its cost of living ranking.
Cost of living increases in Switzerland, where the Swiss franc has emerged as a haven currency amid the eurozone crisis, led to currency-related cost pressures there. For the first time in 20 years Zurich outranked Tokyo as the world's most expensive city.
Switzerland, Japan and Australia each have two cities in the top most expensive cities in the world.
The survey compares the price of more than 400 items including food, clothing, rent, transport, utility bills and recreational costs.
The least expensive city in the world is Muscat, in Oman. with AAP
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