Australian cities were found to be "a relative picture of stability", while 20 per cent of the cities surveyed by The Economist magazine's Intelligence Unit experienced declines in liveability over the past year. Melbourne was ranked the world's most liveable city, Adelaide fifth, Sydney seventh, Perth eighth and Brisbane 18th. None of these cities saw their ranks change in this year's report. The most liveable cities in the world were Melbourne, Vienna, Vancouver, Toronto, Adelaide and Calgary. The survey's editor Jon Copestake said while Melbourne remained top for a fifth year, the "hostage siege in Sydney late last year has put Australia on a high terror alert, which could affect future scores" for Australian cities.

The cities found to be least liveable were Tripoli in Libya, Lagos in Nigeria, Port Moresby in Papua New Guinea, Dhaka in Bangladesh and Damascus in Syria. The rankings are the result of scores for "lifestyle challenges" in 140 cities worldwide, and issues such as housing affordability are not considered. The report, which costs $5795 for a year's subscription, is used by multinational companies to decide on relative pay for employees when they move cities for work. It recommends a percentage amount employees should get on top of their salary if they move to a city with a poor liveability ranking where "most aspects of living are severely restricted".

Each of the cities chosen is assigned a rating of "relative comfort" for 30 factors across five categories: stability; healthcare; culture and environment; education; and infrastructure. Each factor in a city is then rated as acceptable, tolerable, uncomfortable, undesirable or intolerable, to reach a score out of 100. Melbourne this year scored 97.5 marks out of 100, including full marks for infrastructure. Lord Mayor Robert Doyle said Melburnians might not appreciate how good their city was. Cr Doyle said the ranking was "huge for us" and that many Melburnians did not realise how well known the city was for being ranked the most liveable.

"In a very competitive tourism or education market, this becomes a very important sale point for Melbourne," he said, speaking outside the Melbourne Town Hall on Tuesday. But the Lord Mayor also warned that the city's infrastructure was lacking and noted there were problems with road congestion - and then confirmed that he was being driven the 450 metres from the Town Hall to his next meeting at 101 Collins Street. Cr Doyle has previously encouraged Melburnians to use public transport rather than cars. Questioned over his use of a car to travel such a short distance, Cr Doyle said he often got the tram. "How many of you came to this press conference in a tram? Did you bring the cameras on the tram? Maybe not," he said. Adam Terrill is a town planner with Tract Consultants, which has previously worked with The Age to produce a liveability study comparing the city's 314 suburbs (South Yarra, East Melbourne and Armadale topped the list, Sunshine North, Bayswater North and Hallam were at the bottom).

He said The Economist report only served to highlight how much "liveability" varied across the city. "We need to focus on improving the liveability of outer areas and allow more people to live in inner areas," said Mr Terrill. He said much of Melbourne was becoming increasingly expensive to live in. "Large parts of Melbourne are unaffordable – the challenge is to share this liveability by finding homes for new residents that they can afford," he said. The Victorian Council of Social Service said the ranking ignored the high number of people living in areas of entrenched disadvantage. "Inner city Melbourne is an attractive proposition for international recruiters who use [this survey] to lure prospective employees," said the council's chief executive Emma King.

"The reality is very different for people who can't afford to live where the vast bulk of services are." Committee for Melbourne chief Kate Roffey said there were always questions about rankings, "and in particular how and what they measure, but there is no doubt The Economist Intelligence Unit ranking … is a significant achievement". She said while Melbourne ranked well in both The Economist survey and a recent ranking by Monocle magazine, Melbourne still had much to do regarding "city-shaping infrastructure projects, maximising access to jobs ... and making sure we remain a liveable city for everyone by providing more affordable housing". Melbourne University urban planning professor Carolyn Whitzman said the report accurately assessed the city as a great place for international executives to do business. "What it doesn't measure is the inequalities between urban areas," she said, also questioning the inclusion of "liveability" as a key goal of Melbourne's last three planning strategies.

"It's garbage," Professor Whitzman said, noting that the city's urban sprawl meant its environmental footprint also ranked extremely highly internationally. She said the liveability ranking was all too often used to shut down conversations about the real problems with planning Melbourne. "It is used as a tool to cut off talk about how we might do better," Professor Whitzman said.