Here is one idea that may help create cheaper apartments and ease the housing crisis.
Have you ever walked past the early stages of an apartment development and looked down into the abyss of the enormous hole in the ground resembling the 9/11 Ground Zero Memorial? That hole is a (soon to be) basement car park. Creating a huge hole or void of nothing is expensive. Builders love it when they get “out of the ground” as basements can be tricky to build.
The need to provide car parking comes with a lot of complications. Apart from the enormous cost, it impacts town planning, street access / egress, EV charging, development risk, construction time, and often design compromises.
But what if apartments could be built without car parking? Or very few of them. This would not only make that development cheaper, but may also allow more apartments to be built on certain sites. It would also mean that some currently unviable apartment development sites would become feasible. Especially small or boutique ones.
It’s not a new idea. I wrote about exactly this issue almost 10 years ago in Aug 2015.
This week the Victorian Government has picked up the idea. The Premier Jacinta Allan and Planning Minister Sonya Kilkenny announced they want to slash car parking requirements for new apartment developments near transport connections.
Obviously, it is limited to apartment developments close to public transport nodes. At the same time, they want to increase the requirement for bicycle parking and end-of-trip facilities.
The specific locations are yet to be identified.
Cheaper apartments would not only help home buyers but also renters. For apartments near good public transport, the small additional rent paid for an apartment with a car space vs one without does not justify the difference in the purchase price or value of that apartment. This means in certain locations buyers and renters who do not need a car park (or value it as much) will have a cheaper option.
Let’s say a car park adds $50,000 to the price of an apartment and about $40/wk ($2,085 p.a.) in rent. RACV estimates the cost of running a small car is just under $900 per month ($10,800 p.a.).
Therefore, for a tenant, the cost of a car is the extra rent ($2,085) plus the running cost ($10,800) = $12,885 every year. After tax. That buys a lot of Uber fares when trams, trains, or buses don’t take you where you want to go.
And then there is the environmental impact of fewer cars. Plus less road congestion.
It’s a compelling argument to make apartments cheaper to buy or rent plus all the other community and social benefits.
