How changing requirements could unlock 140,000 new homes in Sydney and Melbourne
Up to 140,000 new homes would be built across Sydney and Melbourne if residential parking rules are changed, according to research that shows the cost of building a unit has soared with tens of thousands of dollars spent on parking spaces that may never be used.
Grattan Institute analysis published on Tuesday shows meeting minimum parking requirements for a new unit in Sydney could add $46,000 to $132,000 to its final cost, while the final cost of a flat in Melbourne is higher at $41,000 to $114,000.
Most state governments and local councils impose requirements for the provision of car parking spaces with new apartment and townhouse developments. In some cases this requires the construction of expensive basement car parks or cheaper street car parks at the development site.
But Grattan research shows that in a growing number of cases, the requirement not only adds thousands of dollars to the cost of development but also leaves parking lots unused.
Approximately 40 percent of those living in one-bedroom apartments do not have a car, while 19 percent of those living in two-bedroom apartments do not have a car.
Grattan found that the huge cost of providing car parking was a major factor in whether a house was built or not, and noted that up to 140,000 spaces in Sydney and Melbourne could be commercially viable if parking requirements were removed.
Grattan managing director Aruna Sathanapally said forcing builders to include parking not only increased the cost of completed building but also slowed down construction.
He said there are other options, such as issuing parking permits for residents, that are better and cheaper than forcing the construction of parking spaces that will never be used.
“Many people who live in apartment buildings don’t want or need parking, but they still have to pay for it,” he said.
“Allowing Australian home buyers to choose the car parking they need will make housing cheaper, get more homes built faster and create cities that are more walkable, cleaner and better designed.”
More than 10,000 homes could be built in the Sydney council areas of The Hills and Sutherland counties with the rollback of parking rules, according to Grattan. The Northern Beaches council area could support a further 2000 to 5000 homes.
In Melbourne, between 5000 and 10,000 homes could be built in the Brimbank municipality, while between 2000 and 5000 homes could be built in the Manningham, Maribyrnong and Melton areas.
The research found that the extra costs of building a car park could be the “deciding factor” in a builder’s decision to go ahead with a project or abandon it.
Grattan estimates that $1 billion is spent each year on unwanted parking lots.
The institute estimates that by repealing many parking rules, more than 86,000 unwanted car spaces would be unbuilt and $5.2 billion would be saved in construction costs that would go towards building an additional 9,000 homes.
While most municipalities impose parking requirements on new projects, there are some examples of “parking-free” developments.
In Melbourne’s Fairfield suburb, a 20-apartment development called Nightingale 2.0 was built before the pandemic and there was no parking in the area. The apartments are next to the local train station. The lack of parking has allowed the development of ground floor shops, which, the institute claims, bring “life to the street”.
Grattan found that in most cases, parking lots were not used. In Brisbane, two-thirds of city center spaces are vacant at night. Grattan estimates there are 3000 streets within 10 kilometers of the Brisbane CBD, each of which could provide six additional townhouses without filling existing car spaces.
The middle ring suburbs of Sydney, Melbourne and Brisbane have more car parks than registered vehicles.
Even if parking is available, residents often use it for something else. Grattan noted that homeowners often park their vehicles on suburban streets as they use their parking lots or on-property space for storage or for non-vehicular purposes.
Rather than requiring the construction of space for new developments, some municipalities offer residents parking permits that can then be restricted.
Grattan suggests that councils allow developers to rent or purchase parking separate from the construction of a new home, arguing that this would give developers and homeowners a choice about the level of parking they want.
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
