By James Whittaker and Michael Klein
Anyone with a passing familiarity with the Cayman Islands knows this is an expensive place to live. Residents pay a premium to live in paradise with everything from housing and groceries to dinner and a movie costing more on these islands than anywhere else in the world. In a comprehensive data analysis, James Whittaker and Michael Klein examine some of the highest costs of living in Cayman and assess how we measure up to the United Kingdom and the United States.
Islanders earn more on average
Any cost-of-living analysis must be balanced with consideration of income and spending power. Cayman Islands residents earn more, on average, than Brits and Americans. On top of that, anyone bringing home the median salary in those countries is paying upwards of $7,000 in annual income taxes and national insurance or social security. The average Caymanian family, therefore, has a higher disposable income.
For those at the upper end of the salary scale, Cayman’s high prices are relative, says Steve McIntosh, CEO of CML Recruitment and a member of the Chamber of Commerce leadership team.
“If you take someone on a salary of $100,000, for example, that person would pay $28,000 in tax in the UK. If the cost of living here is 30% higher than the UK, the Cayman resident is still better off, all things considered, than their UK counterpart.”
But the minimum wage is lower
That theory doesn’t hold true at the bottom end of the salary scale, however, where Cayman’s $6-an-hour minimum wage is the lowest of the three countries.
“The high cost of living in Cayman is a huge problem for those on lower incomes,” says McIntosh.
Lower earners would likely not meet the threshold for income taxes, so there is no tax saving to offset the high cost of living compared with an equivalent worker in the US or the UK.
“In general, the more a person earns, the better off they are relative to their counterpart earning the same in any country with income tax,” McIntosh added.
He believes this dynamic disproportionately impacts lower earners who face the same prices at the grocery store.
Cayman’s average house price is almost $1 million
The biggest chunk of any family’s budget goes to housing, and the statistics in Cayman make for pretty grim reading.
Based on a year of sales data from the Cayman Islands Real Estate Brokers Association, the average house price in the territory comes in at almost $1million. That is triple the UK or US average.
That figure is likely distorted in Cayman by a comparatively high number of multi-million dollar sales, cautions Rick Riyat, a senior valuation surveyor with BCQS International.
It is clear, however, that the entry point to the housing market on the islands is significantly higher than in the UK or the US. Riyat said house prices in Cayman have been growing steadily over the last several decades, with no sign of a slowdown, even after COVID-19.
One consequence of the pandemic, he warns, is that banks are now generally asking for higher down payments – usually around 15% – making it even tougher to climb the first rung on the housing ladder.
There is marginally better news on rents which, following significant increases in 2018 and 2019, are starting to come down because of the pandemic and border closure. The departure of around 5,000 expat workers and a host of vacation rentals shifting to the long-term market are starting to impact the asking price, he said. A Cayman Compass analysis of 100 current listings shows the median asking price for rent is still just over $2,000 a month.
Broadband costs remain high
The monthly cost of a broadband Internet connection in Cayman is among the highest in the world, according to a 2020 survey by cable.co.uk.
The $140 monthly price quoted in the survey for Cayman appears to reference some of the costliest ‘broadband only’ packages on the market. It is possible to get cheaper options at slower speeds or bundled in with television packages.
Consumers in the UK and US, however, can get faster broadband significantly cheaper – less than $50 a month. Bringing down the cost of high-speed internet in Cayman remains a technical and regulatory challenge.
Adding a new sub-sea cable, building out fibre infrastructure on island and resolving a number of regulatory disputes involving the major players in the industry have been cited, in previous Compass reporting, as challenges for the industry.
Fuel is cheaper than in the UK
Perceptions of high prices at the gas pump have mobilised consumer action in Cayman over the last few years.
That culminated in a protest and a petition signed by more than 14,000 people when petrol prices tipped $5 a gallon in 2015.
OfReg is currently in the midst of an investigation into the local fuel market.
The regulator – which is also a consumer watchdog for utilities – publishes retail gas prices on its website and benchmarks them internationally.
Daniel Lee, consumer affairs manager at OfReg, said this in itself was having an impact on prices.
“Although we do not have a price-control mechanism in place at this time, prices paid by consumers in the Cayman Islands are usually in the median range of prices in comparative jurisdictions,” he said.
“Without the monitoring by OfReg, pump prices would most certainly be higher.”
The current price of $3.90 a gallon is almost double the cost of gas in the US. Motorists in the UK pay more – almost $5 a gallon – but around half of that goes to the government in fuel taxes.
Private school unavoidable expense for some
The average price of a private education in Cayman is roughly similar to the US and the UK. The key difference is that for some families in the territory it is an unavoidable expense.
Expatriates, with a few exceptions, are unable to send their children to public schools in Cayman.
Over the course of a child’s school career, that can mean a hefty bill – somewhere between $150,000 and $200,000.
For Caymanian parents there is at least the choice of a free education.
However, many opt to go private, believing it is the best chance for their children to get the qualifications they need to earn good jobs and good salaries in Cayman.
Nights out don’t come cheap
Whether it’s dinner and a movie or a few beers and a taxi-ride home, entertainment in Cayman doesn’t come cheap.
The price of a pint of beer at a bar in Cayman will set you back between $6 and $7 – comparable with New York and London, but much more expensive than the US and UK average.
With tourists flocking to the island, in normal times, it is perhaps not surprising that everything from an Italian meal to a new outfit costs more in Cayman. Even healthier hobbies, like going to the gym, are pricier.
Health costs hard to quantify
Cayman, the US and the UK have such vastly different healthcare systems it is hard to compare like-for-like when it comes to costs.
While the most basic health insurance plan in Cayman is available for $168 a month, the reality, says insurance broker Jeanette Verhoeven, is that most people want more protection than that package provides. A more comprehensive plan, including dental coverage, can cost between $400 and $1,000 a month.
In the UK, a nationalised healthcare system means residents are protected from day-to-day costs, though they pay for the services they receive automatically through income tax and national insurance deductions from their pay cheques.
According to Verhoeven, of Bogle Insurance Brokers, the UK and Cayman both spend approximately 10% of their gross domestic product on healthcare, compared with about 17% in the US, which is noted in numerous studies as having the highest healthcare costs in the world.
In general, she believes, the health insurance policies in Cayman could be considered to offer better value than equivalently-priced policies in the US, where many plans have significant deductibles.
One concern in Cayman and the US, compared with the UK, is that an insurance-based health system means those at the lower end of the wealth spectrum may not have access to the same quality of care. Even in the UK, faster access to elective care becomes available via private insurance top-off policies.
“I think it is safe to say that greater wealth will bring greater access to care via better insurance and better ability to access specialty care,” said Verhoeven.
“Once insurance premiums become too large of a share of a person’s monthly costs, they will often downgrade their insurance protection”