Transport costs have risen at triple the inflation rate. Here’s where it’s least affordable

Key PointsThe Australian Automobile Association has released its latest transport affordability index.Typical household transport costs rose 13 per cent in 2023, according to the report.The association cited high up-front costs, higher car loan interest rates and increasing insurance premiums.

Australian households are under increasing budget pressure when it comes to car travel as transport costs balloon to three times the inflation rate.

The typical household transport costs rose by about 13 per cent in 2023, outpacing the inflation rate of 4.1 per cent. Drivers in capital cities faced increases of 12.4 per cent while the average driver in regional areas was hit with a 13.7 per cent rise.

High up-front costs for buying new vehicles, higher car loan interest rates and increasing insurance premiums were behind the ballooning transport costs, according to the Australian Automobile Association’s latest transport affordability index.

Transport costs rose by a smaller 0.7 per cent in the final quarter of 2023 but that was unable to offset large increases throughout the year leading to transport affordability declining substantially.

In December 2022, the average city household spent 15.6 per cent of its income on transport but that rose to 17 per cent a year later. The transport expenditure for regional households rose from 14.4 per cent of their income to 15.8 per cent.

What are the most and least affordable cities for transport?

The report acknowledged that “the relationship between income and costs” determines local affordability of transport.

Hobart had the lowest total transport costs among the capital cities for the December 2023 quarter. But when costs were measured as a share of income, it ranked as the capital with the least affordable transport — with the average household spending 19.3 per cent of income on transport.

The average household in Hobart spent 19.3 per cent of income on transport in the December 2023 quarter. Source: Getty / Piero Damiani

Brisbane was next at 18.7 per cent, before Melbourne (17.9 per cent) and Darwin (17.4 per cent). While Sydney had the highest overall transport costs, the typical household spent only 16.6 of its income on transport.

The average Adelaide household spent 16 per cent of income on transport, with 15.1 per cent in Perth. Canberra was the most affordable capital with the average household spending 14.8 per cent of income on transport.

Among regional areas, Launceston ranked as the least affordable, with the average household spending 20.1 per cent of its income on transport.

Alice Springs was next (18.2 per cent), before Mount Gambier (16.1 per cent), Bunbury (15.5 per cent), Geelong (14.7 per cent), Townsville (13.8 per cent) and Wagga Wagga (12.3 per cent).

‘Everything is just too expensive’

Sabrina Mo works as a building designer in Sydney’s inner west and travels NSW for work, including the occasional trip interstate. She’s feeling the cost increases.

Car registration and insurance costs increased by more than $300 in 2023 compared to the previous year while her toll payments almost doubled.

“Everything is just too expensive,” Mo told the Australian Associated Press. With the uncertain nature of the work taking her to wherever the projects are, she has to keep her transport budget open.

“Sometimes I might have to be out of the office for a whole week and sometimes I’ll be in the office for two or three weeks,” she said. “I have to drive wherever the demand is.”

In 2022 she was paying $1.20 per litre for petrol at the bowser but since 2023 it’s been at least $1.60. And so she’s had to make changes elsewhere.

“For other things like my groceries (budget) … I can manipulate it because I can be creative and start cooking really cheaply.”

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