Cars are great for a huge number of things but at the same time they also cost a lot of money, not just to buy but also to keep running. When talking about running costs most people immediately think about fuel prices but that is only one part of the equation as when other things are added e.g. registration, maintenance, insurance, depreciation, as well as possibly finance costs then things quickly add up to the thousands. These running costs tend up be up around the amount of $7k-$8k per car per year. Due to the way that the city and the country in general has developed, it means that for most people not having a car is impractical and of course opponents to projects like the CRL will happily remind us of that. Now I actually agree with some of that line of thought, for example my parents live in a semi rural part of Auckland and without a car there is no practical way for me to visit them, but I think where things fall down is the number of cars that households need.
One of the biggest benefits of having a strong public transport system in a city like Auckland is that it means households can get away with only having one car and by doing so they have the ability to save substantial amounts of money which possibly it might enable them to buy a better house. I am going to look at two situations where having only one car could make a difference in someone’s life.
A young couple are looking to buy a house, both work in different parts of the city and they each drive to work every day in their own cars. Lets say they both earn a salary of $50k so plugging there details into a loan affordability calculator we get this: (note I have used the ANZ calculator simply because it has the number of vehicles built in and I don’t feel like doing a full made up budget)
Being able to buy a house up to $770k is pretty good although most likely people will want to have a lower loan to value ratio than 95%. But what happens if our PT system was was good enough that they could get to work and other activities using that instead of having to drive.
By simply reducing the number of vehicles that the couple have to 1 they can now afford a house worth up to $77k more than they could before which in this particular case represents a 10% increase in affordability. The interesting thing is changing numbers in the calculator around shows that regardless of your income, each extra car you have impacts affordability by the same amount of $77k. The reason for this is simple and relates back to the fact that cars cost a lot of money to run and by not owning a car you have more money that you could use to pay a loan.
In this case we have a young family that are struggling to get by, they are renting a house and again both adults work in different parts of the city and both drive to get to work. Due to the need to drive they spend a lot of their income on keeping the cars on the road which are primarily for them to get to and from work. This puts a lot of pressure on their finances which means that often their kids miss out on things, an all too familiar story in some parts of the city. Now once again lets think what difference could be made as a result of having a decent PT system, the improved service allows both parents to use PT to get to work and even though they have to pay for their bus/train it still works out substantially cheaper than driving. This allows them to get rid of one of their cars keeping the other one for times when the whole family need to be shuttled around. As a direct result of this the family are able to save thousands per year which is money that they can use to improve the quality of life for them and their children.
It is pretty unlikely that we will see the city develop to the point where a large number of households don’t need a vehicle at all any time soon but one of the biggest benefits of an improved PT system is that we should be able to reduce the number of cars that we need. This will reduce the amount of money we each spend on transport and that is money that we can put to other uses whether it be from buying a better house to helping to feed the family. To me this is one of key reasons we need to really develop a quality PT system and it was exactly the reason why my wife and I decided to pick a house within walking distance of a rail station. As a result we have only needed one car which has been a huge saving and I can only think of one or two times over the last 4 years where having a second car would have been useful.