Recent research by SGS Economics and Planning – commissioned by Great Southern Bank – shows that living costs for outer suburb homebuyers are up to $16,000 more per year than for homebuyers in the inner city areas.
The report finds that those living in Melbourne's outer suburbs spend significantly more on fuel, public transport, and energy bills, among other expenses. In some cases, outer suburban residents could be paying up to 63 per cent more than those who live in inner-city apartments.
The ongoing costs of living in a two-bedroom household are 27 per cent higher than living in a two-bedroom apartment in inner city suburbs. In dollar terms, owners living in a two-bedroom house could pay up to $11,500 more yearly than those who buy and live in apartments in inner suburbs. This figure increases to $16,000 more for a three-bedroom dwelling, totaling $80,000 over the first five years of home ownership.
Andrew McDougall, Principal and Partner at SGS Economics and Planning, said:
People looking to buy in Melbourne’s outer suburbs need to know that there are a whole bunch of costs beyond a mortgage – particularly if you are driving long distances for work.
Our findings mean that many homebuyers who are priced out of buying a home in the inner city will face long-term costs from purchasing and living in the middle and outer suburbs.
These findings have implications for individual homeowners, governments, and communities.
Beyond financial costs, living in the outer suburbs has economic, social, and environmental impacts. We estimate that the cost of environmental impact is 300 per cent higher because of the additional transport needs of outer-suburb buyers compared to their inner-suburb counterparts.
The economic costs of providing services and infrastructure to outer suburb houses are far greater. Servicing a two-bedroom house in the outer suburbs costs $22,300 per year, whereas a two-bedroom inner-suburb apartment costs $8,400.
Melbourne’s outer suburbs are rapidly growing. The population on Melbourne’s outskirts is expected to grow by one million people by 2056. These costs will only be compounded if the growth continues to be rolled out without the needed infrastructure, services and jobs.
Given the high costs to individuals, governments and communities, there needs to be a concerted effort to supply quality and affordable housing in Melbourne's inner and middle suburbs.
While the Victorian Government plans to slow the population growth of the outer suburbs, SGS believes policy is needed for home buyers who inevitably move to these areas to access the necessary infrastructure and employment that reduce these costs.
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