Homes, Trains & Automobiles June 2007 RETURN
In the past 2 years we have seen car running expenses, public rail use and inner city property values go through the roof.
This is no coincidence, as transport costs go up, city living is comparatively more affordable.
For the car owner we recently have seen massive fuel hikes, insurances up and a competitive resale market. According to RACV data, this has increased the normal running costs of an average Falcon or Commodore to around $12,000 per year. Considering the majority of households are now 2 or more cars this is a definite issue.
We have seen many people over the years expect to save money with a smaller mortgage on the outskirts of town, only to find themselves paying up to $200 - $300 per week for petrol alone to get to work. This is a false economy.
A viable protection from this is to minimise car usage, and/or utilise public transport and consider an inner city lifestyle. The car savings had can be reinvested in a higher mortgage, leading to ownership of more expensive property, all with the money that would have already been spent at the petrol bowser.
We suggest the buying public is fast becoming aware of these issues and the increase in city edge property is no temporary situation. This thinking was one of the most important reasons for the Postcode 3000 programme. This was a federal, state and local government initiative in the 1980’s and 1990’s to get people living with-in the city infrastructure. The aim was 117,000 new residences within 5kms of town by 2015. It was cheaper and made sense to use existing facilities rather than having growth only via suburban sprawl more than 50kms from town.
Lets discuss some of the data behind this:
Train usage alone in the past 2 years has increased by 10% per year compounding.
An extra 156,000 users are expected to take the tally to around 760,000 per day.
Total city trips will surge from 174 million to 231 million by the year 2010. The strong prediction is that passenger growth for the network will pressure its capacity to meet the increased demand, an increased network will result yet with more users it could be more affordable.
The cost of running a single average car has gone from $200 in 2005 to $235 in 2007, a hike of some 17.5%. Add this to the fact that less cars are needed per inner city household there becomes a distinct gap in money left over for mortgages and lifestyle.
The price differential for inner & outer property over the same period provide a strong statement. We have listed a suburb snap shot for your consideration of median values, as per the REIV data:
Median Values $000
03 05 07 % rise
Sunbury 227 243 243 7.0
Glenroy 274 283 290 5.8
Nth Melb 418 459 508 21.5
Kensington 372 423 440 18.2
Ascot Vale 413 432 483 16.9
It is now clear that a trend for the gap between inner & outer values is widening and we see this as a continuing long term trend with very strong reasoning:
Modern governments want efficiency in growth and have encouraged new multi unit dwellings near town by easing planning requirements;
More of the buying public are now heavily employed in professional areas with long hours. They want property with less maintenance & a lot closer to work; and
Empty nesters are now downsizing from their larger family homes to spend both their money and time on lifestyle pursuits closer to the city entertainment precincts.
To take advantage of this does not mean selling the farm to buy a bicycle and studio apartment under a railway bridge. The inner city is bursting with spacious homes in well regarded neighbourhoods. The trick is to get in while you can still afford it, or to start with select investments and beat the property cycle at its’ own game.
In the past 2 years we have seen car running expenses, public rail use and inner city property values go through the roof.
This is no coincidence, as transport costs go up, city living is comparatively more affordable.
For the car owner we recently have seen massive fuel hikes, insurances up and a competitive resale market. According to RACV data, this has increased the normal running costs of an average Falcon or Commodore to around $12,000 per year. Considering the majority of households are now 2 or more cars this is a definite issue.
We have seen many people over the years expect to save money with a smaller mortgage on the outskirts of town, only to find themselves paying up to $200 - $300 per week for petrol alone to get to work. This is a false economy.
A viable protection from this is to minimise car usage, and/or utilise public transport and consider an inner city lifestyle. The car savings had can be reinvested in a higher mortgage, leading to ownership of more expensive property, all with the money that would have already been spent at the petrol bowser.
We suggest the buying public is fast becoming aware of these issues and the increase in city edge property is no temporary situation. This thinking was one of the most important reasons for the Postcode 3000 programme. This was a federal, state and local government initiative in the 1980’s and 1990’s to get people living with-in the city infrastructure. The aim was 117,000 new residences within 5kms of town by 2015. It was cheaper and made sense to use existing facilities rather than having growth only via suburban sprawl more than 50kms from town.
Lets discuss some of the data behind this:
Train usage alone in the past 2 years has increased by 10% per year compounding.
An extra 156,000 users are expected to take the tally to around 760,000 per day.
Total city trips will surge from 174 million to 231 million by the year 2010. The strong prediction is that passenger growth for the network will pressure its capacity to meet the increased demand, an increased network will result yet with more users it could be more affordable.
The cost of running a single average car has gone from $200 in 2005 to $235 in 2007, a hike of some 17.5%. Add this to the fact that less cars are needed per inner city household there becomes a distinct gap in money left over for mortgages and lifestyle.
The price differential for inner & outer property over the same period provide a strong statement. We have listed a suburb snap shot for your consideration of median values, as per the REIV data:
Median Values $000
03 05 07 % rise
Sunbury 227 243 243 7.0
Glenroy 274 283 290 5.8
Nth Melb 418 459 508 21.5
Kensington 372 423 440 18.2
Ascot Vale 413 432 483 16.9
It is now clear that a trend for the gap between inner & outer values is widening and we see this as a continuing long term trend with very strong reasoning:
Modern governments want efficiency in growth and have encouraged new multi unit dwellings near town by easing planning requirements;
More of the buying public are now heavily employed in professional areas with long hours. They want property with less maintenance & a lot closer to work; and
Empty nesters are now downsizing from their larger family homes to spend both their money and time on lifestyle pursuits closer to the city entertainment precincts.
To take advantage of this does not mean selling the farm to buy a bicycle and studio apartment under a railway bridge. The inner city is bursting with spacious homes in well regarded neighbourhoods. The trick is to get in while you can still afford it, or to start with select investments and beat the property cycle at its’ own game.