Up to 140,000 new homes would be built across Sydney and Melbourne if rules on residential car parking were overhauled, according to research that shows the cost of building a unit is being pushed up by tens of thousands of dollars spent on parking spots that may never be used.
Meeting minimum car parking requirements for a new unit in Sydney can add between $46,000 and $132,000 to its final cost, Grattan Institute analysis released on Tuesday shows, while in Melbourne an apartment’s final cost is between $41,000 and $114,000 higher.
Most state governments and local councils attach requirements for the supply of car parking places with new apartment and townhouse developments. In some cases, this requires the construction of expensive basement car parks or cheaper on-street parking on the development site.
But the Grattan research shows that in a growing number of cases, the requirement not only adds thousands of dollars to the cost of the development, but the car parks go unused.
About 40 per cent of people who live in single-bedroom apartments don’t own a car, while 19 per cent of those with a two-bedroom unit do not.
Grattan found that the huge cost of providing car parking was a key factor in whether a home was built, noting that up to 140,000 places in Sydney and Melbourne were commercially feasible if parking requirements were dropped.
Grattan chief executive Aruna Sathanapally said forcing builders to include parking not only added to the cost of the completed building but also slowed down construction.
She said there were other options, such as permit parking for residents, that were better and cheaper than forcing the construction of parking that may never be used.
“Many people who live in apartments don’t want or need car parking, but they are forced to pay for it anyway,” she said.
“Letting Australian home buyers choose the car parking they need will make housing cheaper, get more homes built faster, and create more walkable, cleaner and better-designed cities.”
According to Grattan, more than 10,000 homes could be built in the Sydney council areas of The Hills and Sutherland shires by winding back car parking rules. The Northern Beaches council area could support between 2000 and 5000 more homes.
In Melbourne, between 5000 and 10,000 homes could be opened up in Brimbank council, while between 2000 and 5000 could be built in the Manningham, Maribyrnong and Melton areas.
The research found the extra costs of constructing a car park could be the “decisive factor” in a builder deciding to go ahead with a project or abandoning it.
Grattan estimates $1 billion a year is being spent each year on unwanted car parks.
By abandoning many parking rules, the institute estimates more than 86,000 unwanted car spaces would not be built, saving $5.2 billion in construction costs that would go towards building an extra 9000 homes.
While most councils impose car parking requirements on new projects, there are some examples of “park-less” developments.
In the Melbourne suburb of Fairfield, a 20-apartment development called Nightingale 2.0 was built before the pandemic with no car parking at the site. The apartments are next to the local railway station. The absence of car parking enabled the development of ground-floor shops, which the institute claimed brought the “street to life”.
Grattan found that in many cases, car parks go unused. In Brisbane, two-thirds of spaces in the inner city are unoccupied at night-time. Grattan estimates that within 10 kilometres of the Brisbane CBD, there are 3000 streets that could each provide six additional townhouses without crowding existing car spaces.
In middle ring suburbs of Sydney, Melbourne and Brisbane, there are more car parking spaces than registered vehicles.
Even where parking is available, residents often use it for something else. Grattan noted that home owners often park their vehicles on suburban streets as they have used their carports or on-property spaces as storage or for non-car purposes.
Some councils offer parking permits to residents, which can then be capped, rather than requiring the construction of spaces for new developments.
Grattan suggests councils allow builders to either rent or buy parking spaces separately from the construction of a new home, arguing this would give developers and home owners a choice about the level of parking they want.
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Shane Wright is a senior economics correspondent for The Sydney Morning Herald and The Age.Connect via X or email.
