There are many factors that impact Affordable Housing in a Australian Cities – cost of land, cost of construction, the size of the home, to mention the obvious, but seldom mentioned is the transport options that homeowners are confronted with and how this can impact the household budget. Transport is a big cost to a household budget and it can vary depending upon where you live in a city. In Australian cities the further you go out from the centre of the city, typically the less your transport options are, and generally the cheaper the housing. This is because in Australia our cities follow a suburban morphology and are generally car dependant. A key factor in travel behaviours is that jobs are typically found more so in the centre of the city and this decreases as you progress further out to the suburban fringe. This means people that live in the urban fringe generally have greater distances to travel by car to get to work. This impacts household budgets significantly.
Contrast this with people that live in the inner and middle suburbs of a city, yes property values are higher but travel budgets are less for two reasons – firstly they generally travel shorter distances to get to work, and secondly they have greater transport options through access to good public transport, cycling and walking. When we look at cities such as Melbourne, the inner and middle suburbs are typically well serviced by Passenger Rail, Light Rail, Buses and connected pedestrian and cycling networks which offer an alternative to the automobile to travel to work and places of interests. Its not uncommon in these inner city areas that people can get away with having only one automobile in the family, relying on up to 40% of their daily trips through transport ‘other’ than the private automobile. Because public transport is relatively cheap, travel budgets are significantly lower for people living in the inner and middle suburbs of our cities.
Access to alternative transport can be lucrative from a ‘household budget’ perspective as described in my book – The New Australian Dream. If people have greater access to ‘other’ transport options, they can afford to rely on one vehicle per family which can potentially save hundreds of thousands of dollars over a 10 year period. Take the example below:
If Jane and Larry live out on the urban fringe and have jobs that are 15-20 kilometres away (not uncommon in Australian cities) they would have to rely on 2 vehicles to moving around the city. Contrast this with Frank and Anne who live in an inner city location and travel just 5-10 kilometres per day to work and have access to public transport. The cost difference for the two couples over just a 10 year period is significant:
Vehicle cost: outer suburb (2022)* Vehicle cost: inner suburb (2022)**
Vehicle licensing $2,500 / $1,250
Vehicle Insurance $2,000 / $1,000
Maintenance cost $3,000 / $1,000
Running Cost (oil/petrol) $10,500 / $3,250
Vehicle depreciation $9,000 / $4,500
Public transport cost $200 / $1,500
Total (1 year) $27,200 / $12,500
Total (10 years) $284,500 / $125,000
*Based on two vehicle in the household
**Based on one vehicles in the household
The cost savings of only having one car is enormous and the savings could be put towards reducing your mortgage. This fact is a particular reason why State and Federal Governments across Australia are recognising the importance of having an excellent and diversified public transport system that provides households with better transport options that can dramatically reduce their household cost of living. This makes for a more resilient city that is less beholden to the ever increasing price of petrol and makes for a more sustainable city since greenhouse gas emissions per person for public transport travel is dramatically lower than the equivalent in travel via the private automobile.
Over the last 20 years many cities in Australia have been investing in Light Rail as a means to diversifying the transport offering for residents, notably in Sydney, Melbourne and the Gold Coast. There are also plans for Newcastle and Melbourne to expand their Light Rail Network. Light Rail is considered one of the best forms of public transport with proven benefits in encouraging investment through diversified housing (i.e. apartments), is reliable and has a high quality ride experience which makes it a favourite for users. Whilst disruptive at first to implement, Light Rail has proven to transform cities. Take the Gold Coast Light Rail system which opened in 2014. At the cost of $1.3 billion dollars for 13 kilometres of track, the system can boast an estimated 18,000 passengers per day and over 6.5 million passengers between 2014 and 2021. Highly successful, the system is reducing travel costs and has generated apartment investment to $350 million (up to 2021) which supports the viability of the system by placing more people closer to the transport network.
As cities In Australia contemplate their transport options, in Perth a consortium of 15 Local Governments have come together with over 30 industry groups to lobby the current McGowan Labor Government to support the planning and delivery of Mid-Tier Public Transport (Light Rail, Trackless Trams and Bus Rapid Transit). Mid Tier Public Transport, preferably in the form of Light rail is seen as a ‘game changer’ for Perth that will encourage more medium and high density development in existing suburbs and create a more resilient city that otherwise is in danger of being held for ransom by higher petrol prices and creeping congestion.
So far the McGowan government has been lukewarm on the idea and prefers to focus on expanding the passenger rail network and rely on buses which is considered by many to be short sited and counter productive to reducing Perth’s car dependency and reliance on oil. Buses have not been as successful in solving ‘car dependency’ and can be costly to run when the average bus trip has less than 2 people. Persisting with this transport offering is proving to be counter productive to ‘city transformation’ and as Perth is expected to grow by an addition 1.4 million people over the next 25 years, without a quality and diversified public transport system that encourages more people to live in the ‘centre’ of the city, Perth is likely to continue to be an expensive, congested and carbon intensive city.