Sydney is third most expensive city in the world, according to The Economist's survey titled, "Worldwide Cost of Living 2013."
Melbourne is ranked fifth while Brisbane is at 21st and Adelaide at 37th.
The survey found that Australian cities attained the highest-ranked position. Cost of living in Australian cities has been rising drastically because of economic inflation and currency fluctuation.
According to the survey, there was no Australian city among the 50 most expensive cities 10 years ago. Australian cities started climbing up the list in 2010.
But even with the Australian cities being ranked as world's most expensive, these cities offer better value-for-money to foreign visitors because of the decline of the Australian dollar.
Consequently, the inflation and currency appreciation in New Zealand make Auckland's and Wellington's cost of living more expensive than the ranked Australian cities.
Auckland ranked at 17th while Wellington ranked at 19th.
"The long-term rise of the Australian dollar, which has doubled in value in the last decade, has fallen back lately, with a corresponding decline in relative prices. But cities like Melbourne and Sydney now appear to have cemented their position among the most expensive across Europe and Asia," Jon Copestake, The Economist Intelligence Unit's Chief Retail and Consumer Goods analyst and editor of the Worldwide Cost of Living and Liveability surveys, said.
The Economist Intelligence Unit's (EIU) WorldWide Cost Living Survey compares 131 cities with New York as its basis.
Singapore is the world's most expensive city, followed by Paris, Oslo and Zurich.
Asian and Australian cities have four of the 10 most expensive cities and four of the cheapest.
Europe has five of the 10 most expensive cities.
Meanwhile, Mumbai is the cheapest city to live alongside New Delhi, Karachi and Kathmandu.