Sydney is now the seventh most expensive place to live in the world, a report says.

Oslo, Zurich, Geneva, Copenhagen, Stockholm and Tokyo are the only cities with higher living costs, according to financial services firm UBS.

Source: UBS Prices & Earnings Report 2010

The rankings, published in the annual Prices and Earnings report update on Tuesday, are calculated by comparing the cost of an average "shopping basket" of 122 goods and services.

It's not all bad news for Sydneysiders, because with high living costs come higher wages, UBS found.