Aussie drivers are being hit with soaring petrol prices as the cost of oil surges amid the Middle East conflict, with multiple retailers from the bush to Sydney reportedly also experiencing widespread shutdowns as they run out of fuel.
Some countries, such as Sri Lanka, are resorting to new measures including a four-day working week and working from home mandate, in order to preserve its dwindling fuel and gas reserves.
There are already forecasts of how the global impact might influence Australia’s property market with some experts suggesting this could create a new location factor for Aussie households, as rising petrol prices threaten to add thousands to the annual cost of long-distance commuting.
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Fuel prices in Australia continue to rise due to escalating conflict in the Middle East. Picture: Alexi J. Rosenfeld/Getty Images
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Managing Director of private wealth firm Your Future Strategy Gareth Croy said this could cause an unexpected “suburban squeeze” pushing buyers back towards the CBD.
Mr Croy warns petrol surging to $3 a litre will push buyers to rethink living locations – driving renewed demand and a spike for inner-city properties where commuting costs are lower.
“For many outer-suburban families running two cars, $3 petrol could easily add $2,000 a year to their household fuel bill,” he said.
“Housing affordability has pushed many Australians further from where they work, but rising fuel prices remind us that distance has a cost.
“A long commute might seem manageable when fuel is $1.80 or $2 a litre, but when it moves towards $3, suddenly living closer to work starts to make a lot more financial sense.
“Petrol, tolls, parking and car wear and tear can add up to thousands of dollars a year, particularly for households running two cars.”
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Gareth Croy
LJ Hooker Head of Research Mathew Tiller said if the petrol prices are a temporary spike, short-term behavioural changes would be more likely.
This included driving less, using public transport more, carpooling, cutting back on discretionary car trips or long weekend drives and working from home more where possible.
“In the short-term, the idea of people broadly moving back to the CBD because of petrol prices is probably a little bit overstated,” Mr Tiller said.
“Higher petrol prices do put pressure on household budgets especially those in the outer suburbs where people rely on cars more, but moving home is a big financial and lifestyle decision and most people would not do because of what may potentially be just a temporary spike in petrol prices.”
The federal Treasury’s scenarios suggest petrol prices could remain high for another three years, even if the war against Iran ends relatively soon.
According to Mr Tiller, long-term impact of prices could influence homeowner location.
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While public transport use may spike, those in regional areas lack the same access. Picture: NewsWire / Gaye Gerard
“That’s where we’ll start to see people then make a decision where they choose to live and I think in those instances, rather moving back into the CBD, suburbs with really good public transport links will become more popular,” he said.
For regional markets where homeowners rely on cars more, Mr Tiller said there may be less ability to move closer to public transport with limited housing and transport options.
“If they are working from home in a regional centre, maybe they will consider moving back to a major capital or a major city,” he said.
“That’s more of a medium to longer-term trend rather than something that would happen over the short-term.”
Shannan Whitney director and founder of BresicWhitney said there has not been any spike in inner Sydney city properties currently as a result of the petrol price increase.
“The property market decision making doesn’t react as quickly as the events have happened abroad,” he said.
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Some experts suggest if rising fuel prices continue long-term this could impact property location. Picture: NewsWire / Gaye Gerard
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“Consumerism on daily needs and various other things move quickly, things like lifestyle choices around asset prices are quite significant and a major thing in someone’s life, we wouldn’t expect any major changes as quickly as the events have happened in the Middle East.”
Mr Whitney said higher petrol prices that continue to years might influence buyer location.
“I would say that might have an impact, but that would be quite a bit down the track,” he said.
“These type of decisions are significant lifestyle decisions for people – there’d need to be some evidence that this is going to stay in place for 12 months or more.
“I think the market is sort of watching for now.”
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