Wasted space?

Could fewer parking spaces in new apartment developments lead to more affordable housing? A report released this week by the Grattan Institute suggests that every year, Australia spends more than $1 billion building off-street car-parking that residents don’t want or need.

State and local governments typically require new housing to include off-street parking, yet the research found that about 40 per cent of households in studio or one-bedroom apartments, and 19 per cent of households in two-bedroom apartments, do not own a car. What’s more, 58 per cent of households in family-sized apartments with three or more bedrooms have just one car, or none.

The result is a mismatch between what parking is mandated, and what’s needed. There are more car spaces in apartments in Sydney and Melbourne than cars. Off-street car-parking accounts for 13 per cent of the built floor space of apartments in these cities. And as much as 40 per cent of these spaces sit vacant each night.

These rules add $70,000 to the cost of building a typical two-bedroom apartment in Sydney, $62,000 in Melbourne, $113,000 in Brisbane, $137,000 in Perth, and $95,000 in Adelaide. This extra cost acts as a handbrake on new housing.

The Grattan researchers suggest, therefore, that state and local governments should remove parking requirements for new housing developments. Home-builders would still provide the spaces that home-buyers want, but not at the level currently forced upon them, the report reads. When cities abroad removed minimum parking policies, new residential developments included parking at around half of the rate, or sometimes less, than previously required.

This change would cut thousands of dollars from the cost of new homes and shave months off the time to construct them, the researchers say. ‘It would avoid the cost of constructing more than 86,000 unwanted car spaces nationwide over the next five years – spaces that would otherwise consume $5.2 billion in construction resources that could go toward building more than 9,000 extra homes.’

The idea is not without its controversies, however. Anecdotal replies have pointed to residential streets clogged with cars as a result of insufficient parking space in new multi-unit developments.

In response, the report suggests that state and local governments ‘should instead better manage demand for on-street car-parking in high-demand areas. Most on-street car-parking is free to use, and is typically occupied by local residents who already have off-street spaces. Better managing on-street car-parking via permit schemes, time limits, and user pricing would reduce congestion on our streets. Charging for on-street parking would also provide a valuable source of revenue for cash-strapped local councils that could be reinvested in local infrastructure.’

The report concludes that state and local governments should also remove barriers to allowing parking spaces to be purchased or rented separately from housing. ‘Unbundling’ car spaces from homes would give residents greater choice to purchase or rent parking in line with their needs – making housing cheaper for households that don’t want a car space, and reducing pressure on on-street parking.

The full report is available from the Grattan website.