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Cars are unaffordable to run in Sydney

According to a 2016 housing affordability survey, Sydney is the second most expensive in the world after Hong Kong. It’s no surprise that transport in Sydney is becoming unaffordable, compared to other Australian cities. Australian Automobile Association (AAA) has developed Australia’s first Transport Affordability Index. It reveals the real cost of car ownership and public transport.

Household budgets stretched

Households in Australian cities pay an average 13% of their budget on transport, compared to 1-3% for electricity, water and telecommunications combined. Sydneysiders, compared to other cities, spend the most on transport in dollar terms and as a share of household income:

  • A two-car household in Sydney pays $419 a week, compared to $376 in Brisbane and $348 in Melbourne
  • Sydney households spend 17% of their weekly income on all transport
  • Owners pay more to run a car in Sydney because of tolls, registration and CTP insurance
  • A household in western Sydney spends $22,000 per year on transport, compared to one in Hobart spending $14,000 per year.

Transport Affordability Index

The index uses a notional couple with children and two cars, and assumes one family member drives to work, while the other catches public transport. They live in middle to outer suburbs with relatively high populations and access to public transport. The index does not include vehicle depreciation or – unfortunately – the cost of parking.

The index stipulates use of Sydney toll roads twice a week only because of the cost. Even this low use of tolls costs more than fuel for the week. Tolls were the second highest cost in Sydney after car loan payments. It would be interesting to see the cost if parking in the CBD were included.

Heavy taxes

CEO Michael Bradley, AAA said: “It is difficult to identify another area of economic activity in Australia that is taxed as heavily as motoring.”

Taxes include stamp duty, GST, customs duty on cars purchased overseas, luxury car tax, state-based registration, drivers licence, fuel excise, GST on excise, fringe benefits tax. Other expenses are loan repayments, insurance, servicing, fuel, public transport, parking and now road tolls.

Our blog, Cars are more affordable than you think, says Australia is the third cheapest of 11 countries to buy an average car. It just goes to show we can buy a car in Australia relatively cheaply, compared to its running costs.

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