Inexpensive plot of land in rural area may prove costly over time

Estimate: Provincial commuter may lose EUR 200,000 over ten-year period

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Living in the countryside while working in the city may prove a costly alternative over time, suggests a fresh study looking into living expenses, carried out by the University of Vaasa's Levón Institute and commissioned by the City of Vaasa.
      The study focused on working families living in the Vaasa region. The neighbouring communities of Isokyrö, Vähäkyrö, Laihia, and Mustasaari were included in the project.
      According to special researcher Olli Wuori, the differences in the appreciation of real estate combined with the cost of commuting will translate into an additional cost of EUR 200,000 over a ten-year period for those living outside the city.
     
Commuting, particularly for two-car households, was the biggest single additional cost. It is worth mentioning that during the research period, from 1995 until 2004, fuel was also cheaper than it is today.
     
A city worker who has built a house on a cheap plot of land in the countryside may experience an unpleasant surprise ten years later when trying to move back into the city. The urban property prices have skyrocketed, while the rural rates have stayed more or less the same.
      The study covered all the real estate deals made in the area during the ten-year period.
      According to Wuori, the City of Vaasa is not an exception. Estimates based on property transactions and - for the commuting aspect - the Automobile and Touring Club of Finland's annual cost-benefit assessments suggest similar developments in all areas where jobs concentrate in the growth centres, while habitation is scattered around several surrounding municipalities.
      In this respect, the Greater Helsinki area is little different from the Vaasa region. An increasing number of families have been moving out from the capital and its satellite cities to surrounding communities like Järvenpää.
     
The Vaasa study's assumed model family has two members who both work in the city and who own a hypothetical 1,500 square-metre piece of property bought in 1995, with a house on it.
      While calculating the cost of living, such things as taxes, payments of all sorts, travel expenses, and mortgages and interests for a ten-year period were taken into account.
      Through property appreciation and savings in travel expenses, the assets of a family living in Vaasa increased in value by EUR 325,486, while those living in Mustasaari, Vähäkyrö, Laihia, and Isokyrö had to settle for increases to their fortunes of EUR 246,392, EUR 243,460, EUR 179,377, and EUR 111,120 respectively.
     
The municipal tax percentage, the price of land, and the landscape are criteria that many prospective house buyers base their choices on. Childcare and leisure opportunities, and the closeness of shopping facilities, also play a part.
      Few think of the appreciation of the value of the property or even the cost of commuting when deciding where to live.
      Even the availability of public transportation does not necessarily affect the appreciation of the property, Wuori points out.
      Ten thousand people commute into Vaasa every day. The city wanted to look into the actual cost-benefits of living in the surrounding communities.
      The City of Vaasa development director Jorma Pitkämäki was surprised by the results. "Living outside the city is not profitable at all", he says.
      "Normal criteria affecting people's decision of where to live, such as the municipal tax percentage, other fees and charges, or even the price of electricity, did not bring about significant differences between the communities in question", Wuori lists.


Links:
  University of Vaasa Levón Institute
  The City of Vaasa

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