Will driverless cars impact real estate prices?
Financial Planning | 18/04/2018 |
10 min read
Driverless cars are here. What once seemed like science fiction is now a reality, and everyone from Tesla and Uber to traditional car makers like Ford and BMW are testing cars on roads in California and elsewhere.
While there’s debate about mass market adaption, conservative estimates suggest that 1 in 4 cars will be driverless by 2030. That’s going to impact how we live, work and commute. And the knock on effects could help solve Australia’s housing affordability problems. Here’s how.
In the car pool lane
The quest for a shorter, more convenient trip to work has had a significant impact on skyrocketing house prices in Sydney in Melbourne. Simply stated, people would rather avoid spending two hours stuck in traffic, and are willing to pay for a shorter commute, and the convenience of a train station or tram at their doorstep.
Driverless cars [or AVs – automated vehicles as they’re known in the industry] have the potential to change all that. “AVs are expected to significantly reduce travel cost, time and congestion, while increasing safety,” accounting firm KPMG said in a 2017 report on AVs and the public transport sector. “Cost-efficient self-driving cars could change commuter preferences away from conventional public transport.”
Take me home, country road
The broader implications of a driverless world are still being debated, but there are three key areas to consider.
- The flow of traffic will improve
As people move away from owing a car and migrate to using local driverless cars we’ll see the landscape change and more land become available for public use. The reduced need for individual cars will see a reduced need for parking spaces and related services. Cities will become more pedestrian friendly, parking spaces will disappear, family homes will no longer need a double garage, and we’ll be able to move around in a more efficient way.
- Home ownership will be more affordable
Increased transport efficiency will cut commute times and encourage people to move further out of the city. That will free up more land for development, which should see more affordable housing on the market. The lack of dedicated garages and parking spaces will also help reduce the cost of homes and apartments. Being able to spend your daily commute relaxing, sleeping or working will reinforce the perks of living further out.
A house in the hills
A recent article in Bloomberg noted that the link between property and transport has been one of the most durable in human history. Driverless cars have the potential reimagine that. If they can free us from traffic jams and the inconvenience of mass transport, they open up new possibilities for work and housing.
According to a report by John Burns Real Estate Consulting, automated vehicles will become commonplace in the next 10-20 years, and that will, “disrupt entire industries while triggering structural shifts in housing and the economy."
If that means more affordable housing it’s sure to be welcomed in Australia.
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