It is the first time a European city has topped the rankings of the Economist Intelligence Unit annual global survey.
"Auckland has in fact registered a minor improvement". The top-ranked American city is Honolulu, with a global ranking of 23.
The survey also revealed the least liveable cities of 2018, with Damascus in Syria coming in first place.
Japan - which alongside Osaka boasted Tokyo in the top 10 (joint seventh) - had a nationwide average of 347 people per square kilometre, but its cities were still famed for their transport networks and living standards.
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The nearest to New Zealand was Port Moresby in Papua New Guinea, at 136. Another strong contender was Canada, with three of its cities in the top 10: Calgary (4), Vancouver (6) and Toronto (7).
"Those that score best tend to be mid-sized cities in wealthier countries", researchers said in their report.
Hamburg and Helsinki, that held tenth and ninth place last year, have dropped out of the top ten, while this year's ninth-place spot went to Copenhagen, which achieved a score of 96.8%.
"The "big city buzz" that they enjoy can overstretch infrastructure and cause higher crime rates".
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Puerto Rico's San Juan, which was hit by two hurricanes in 2017, experienced the sharpest fall, dropping 21 places down the list to 89th place, with a score of 69.8%.
The ranking's editor, Roxana Slavcheva, said Manchester had "shown resilience in the city's recovery from a recent, high-profile terrorist attack, which previously shook up stability".
But at the other end of the scale, Damascus managed a score of just 30.7 percent.
Harare - the largest city in Zimbabwe - was also in the bottom ten thanks to its crime rate and possibility of civil unrest and political violence, as was Libya's Tripoli due to ongoing war and fighting in the city. It was followed by Bangladesh's Dhaka and Lagos, Nigeria's commercial centre. Almost half the cities in the survey saw their ratings improve over the a year ago.
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