Sunday 14th April 2019

Why you should consider ditching the car to save for a home.

Why you should consider ditching the car to save for a home.

Car ownership is on the decline with young Australians. The change could be due to rising housing prices and thus altered priorities for first-time home buyers.

The latest Household, Income and Labour Dynamics in Australia (HILDA) survey shows that between 2012 and 2016, the number of 18- and 19-year-olds who held a licence was down from 71 per cent to 64.8 per cent. For those aged 25 to 29, the numbers were down from 90 per cent to 86.1 per cent.

At the same time, Domain data shows that from 2011 to 2016, the median housing price in capital cities went from under $500,000 to $713,433, more than a 43 per cent increase.

Here’s how these statistics may be related.

Fewer car costs means more money for a home

In the major cities, people often take public transportation or ride a bike to work to avoid sitting in traffic. Many city dwellers also use increasingly popular car services such as Uber to get around. These shifts mean that fewer people need to have their own car.

Melbourne and Sydney typically have the highest housing prices and cost of living of out anywhere in the nation. So, these alternative options for getting around may seem more and more enticing, as savings accounts can disappear fast. News.com.au has reported that taking public transportation in the cities can save Australians thousands of dollars per year.

It costs a lot to own and maintain a car

Savings on car payments, car loan interest, insurance and fuel can be used toward purchasing a home instead.

RACQ estimates that owning a car, on top of its initial purchasing price, ends up costing owners from $120 to $340 per week. Without that cost, think about all the money you could save, especially if you have a car loan.

Over five years, for instance, you could spend well over $50,000 just to have the car.

It’s easy to see why younger generations may be opting for public transport. With high housing prices and an unsteady market across the nation, it may be worth cutting car expenses to save for a home.

For more information on saving for a home, contact our team today.