Young Australians are Forgoing Cars to Save for Property
05Mar

Young Australians are Forgoing Cars to Save for Property

The latest Household, Income and Labour Dynamics in Australia (HILDA) survey showed the number of Aussies taking up licenses at 18-19 had declined 6% between 2011 and 2016. These figures leave just under two-thirds of 18-year-old men and women as licence holders.

Over the same period, the median price of a home in Australia’s capital cities rose from $497,059 to $713,433, an increase of more than 43 per cent, according to Domain Group data.

Co-author of the HILDA study, Roger Wilkins, said the decline in licence take-up at younger ages was a marked drop, which suggests higher costs and entry requirements putting downward pressure on the numbers of drivers.

“I think mostly the decline has been in the major cities where there are transport alternatives,” he said.

“Things like Uber have lowered the cost of alternatives to driving your own car,” he said.

The costs of owning a car

According to a finder.com.au analysis, a $25,000 car owned outright will cost $5,396 a year in running costs, fuel and depreciation. That is $104 a week. The same car with a five-year loan costs $11,270 a year or $217 a week, equating to more than $56,000 over five years.

How does this impact home ownership?

Financial planner and Wealthful founder, Chris Bates, said many young people had to choose between car or home ownership. Bates also suggested buyers struggling to get into the housing market could sell their cars to increase their deposit.

“The cost of having a nice car might be not buying your first home,” he said.

 

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