London, the only other UK city to feature, came 53rd overall - the same position it held in 2016.
The least liveable city on Earth, according to the study, is Damascus. Given the horror and hardship Syria has witnessed in recent times, few would disagree.
Lagos, Nigeria; Tripoli, Libya; Dhaka, Bangladesh and Port Moresby in Papua New Guinea complete the bottom five.
Despite a year that has seen terrorist atrocities in Australia, Bangladesh, Belgium, France, Pakistan, Sweden, Turkey, the UK and the US, the average rating rose this year for the first time in more than a decade.
Jon Copestake, editor of the survey, said: "Manchester has joined a number of European cities experiencing terror attacks over the last decade or so. Sadly this heightened state of alert has become the new normal for many cities but we are now in a situation where global declines have largely stabilised and even begun to register improvements."
Amsterdam, Reykjavik, Budapest, Singapore and Montevideo are among those cities to have received a boost in the rankings.
Melbourne has topped the rankings for each of the last seven years. The most liveable city from 2002 until 2010, meanwhile, was Vancouver.
The top cities tend to be mid-sized, in wealthier countries, and with a relatively low population density, the report states. "These can foster a range of recreational activities without leading to high crime levels or overburdened infrastructure," it adds. " Six of the 10 top-scoring cities are in Australia and Canada, which have, respectively, population densities of 2.9 and 3.7 people per square kilometre. Elsewhere in the top 10, Finland and New Zealand both have densities ranging between 15 and 18 people/sq km of land area. These densities compare with a global average of 57 people/sq km.
"Austria bucks this trend with a density of 106 people/sq km, but compared with megacities such as New York, London, Paris and Tokyo, Vienna's population of nearly 1.8m (2.6m in the metropolitan area) is relatively small. Global business centres tend to be victims of their own success. New York, London, Paris and Tokyo are all prestigious hubs with a wealth of recreational activities, but all suffer from higher levels of crime, congestion and public transport problems than are deemed comfortable."
Rank City Score
1. Melbourne - 97.5
2. Vienna - 97.4
3. Vancouver - 97.30
4. Toronto - 97.2
5. Calgary - 96.60
5. Adelaide - 96.60
7. Perth - 95.9
8. Auckland - 95.7
9. Helsinki - 95.60
10. Hamburg - 95