The economics of commuting versus city living

Date
    July 27, 2014


Productive time: Tony Simpson has been catching a train to central Sydney for five years.      

Sky-high property prices in the major capitals have pushed an increasing number of Aussie home buyers and renters miles and hours from the central business district in recent years.

Houses in far-flung estates and satellite towns can be a bargain when compared with inner and middle ring metropolitan suburbs – but do the ongoing costs of the trek into town swallow up more of the savings than commuters bargain for?

They can, says senior research analyst Vivienne Bolla, 30, who sold up recently and is preparing to move to the inner city, after spending the past four years commuting to Brisbane's CBD from Ormeau, 50 kilometres south of the city. She and her partner bought and built in the area in 2009, spending about $420,000 on a three-bedroom, two-bathroom house.
Speedy commute: The actual time taken on journey may vary.

Speedy commute: The actual time taken on journey may vary.

‘‘We moved out there because we wanted to be able to live in a house with a dog and have it a bit modern,’’ Bolla says.

‘‘For the same price we built in Ormeau we couldn’t get anything closer to the inner city. You could get a two-bedroom apartment closer in but not a modern one.’’ The pair travel by car into Brisbane each day, Bolla disembarking in the city while her partner goes on to his workplace at Nudgee, on Brisbane’s northside. On an incident-free morning, she arrives at work in 75 minutes.

‘‘It’s a very lengthy amount of time and longer on the way home,’’ Bolla says.      

The bill for depreciation and running costs for their Mitsubishi Lancer Ralliart is equally long. A demonstrator model, the car was purchased four years ago for $36,000 and now has 160,000km on the clock. It requires servicing every 7500kms. Costs were capped at $150 to $220 for the first 60,000km but, now out of warranty, have risen to $300 to $400 at a local mechanic.      

Tyres cost $1000 a set and are turned over more frequently than those on a vehicle doing the average 14,000km a year.

Filling up with premium fuel costs about $150 a week.

Given that the motoring costs are shared between two, public transport alternatives offer small savings, Bolla says.

In addition to being packed with Gold Coast commuters by the time it reaches the local station in the morning, the city train costs $8.80 each way. While living out of town may make sense for workers with the flexibility to do a couple of days a week from home, the five-times a week schlepp has worn thin over time, Bolla says.

‘‘It’s not just the cost, but the time – the congestion is getting worse.’’

Off limits

Plenty of under-40s are having to weigh the cost of convenience versus commuting, as high prices make a home beyond city limits the only affordable option for many, Nexia financial planning partner Craig Wilford says.

‘‘People need to look at all aspects of their life and weigh up whether it’s worth it,’’ he says. Many don’t bother to crunch the numbers thoroughly – or they fail to factor in a range of hard-to-quantify costs alongside the price of petrol, tyres and depreciation, Melbourne financial adviser Steve Enticott believes.

These include the opportunity cost of time wasted on the road instead of at home or in the office, the stress of spending hours behind the wheel, the cost of additional hours of childcare and the triple figure taxi fare after a night out.

In addition, far-flung properties enjoy less capital appreciation than those closer in, leaving their owners not only bearing the ongoing cost of the commute but in a less advantageous long-term position than city buyers.

‘‘I’m a firm believer that if people sit down and do the maths... it just does not add up,’’ Enticott says.      

Budget-constrained buyers who want to get on the property ladder and circumvent the travel costs could consider buying an investment property out of town and renting closer in, he adds.

Some commuters such as analyst programmer Tony Simpson, who spends two and a half hours getting to work in central Sydney each day, say the cost savings and lifestyle benefits of country living outweigh the pain of hours on the train.

Simpson, 38, his fiancee Michelle and their two children have rented in Mittagong in the Southern Highlands, 110 kilometres from the CBD, for the past five years.

They pay $450 a week for a three-bedroom house – less than the $550 a week they were spending on a tiny Marrickville terrace back in 2009.

Simpson worked from home when the family first relocated but now catches the train to the Circular Quay offices of his personal finance software start-up Debt To 10K, at a weekly cost of $60.

Although he wouldn’t contemplate driving the same route, the journey is easily passed working, reading or gaming, he says.

‘‘You can turn the commute into quite a productive time.’’

Read more: http://www.theage.com.au/money/planning/the-economics-of-commuting-versus-city-living-20140723-zvse4.html#ixzz38cPDJq1E

We always talked about it but never actually had a go at decentralisation

Sir Grappler Truth Teller wrote on Jul 27^th, 2014 at 1:24pm:


Australian society is being turned on its head. Now the poor are seeking refuge in the country while the rich are taking over the cities.

Sir Grappler Truth Teller wrote on Jul 27^th, 2014 at 4:24pm:


The only thing missing is cannibalism. Abbott hasn't rolled that out yet.

I have always tried to live close to work. I spent a few years living a five minute walk away (though I often took my bike to save time). Now I am kind of screwed though - thanks in part to work moving further away.

The first point to remember is, do you have to work in the CBD? You can often get better paying, more satisfying work in random places.

Trains are a good second option. You can read or use a laptop on the train, so at least the time is not wasted.

Yes I use my daily commute to call my broker and buy pork bellies in the morning and sell them by my return drive in the evenings. I find I maximise my profits that way and still feel energetic enough to give my secretary a good rogering in our secret hideaway pad in the inner city before my return home to the little woman.