Why ditching car park rules could make homes cheaper
Jacob Shteyman |
Changing car parking requirements could shave about $70,000 off the cost of building a typical two-bedroom apartment in Sydney.
A report from the Grattan Institute revealed more than $1 billion is wasted on building off-street car parks that go unused.
Despite rules requiring new housing developments to include off-street parking, about 40 per cent of households in studio or one-bedroom apartments and 19 per cent of households in two-bedroom apartments don’t own a car.
“Many people who live in apartments don’t want or need car parking, but they are forced to pay for it anyway,” Grattan Institute chief executive Aruna Sathanapally said.
Developers would still build parking spaces demanded by the market if parking minimums were removed.
But it would prevent the need to build more than $1 billion in unwanted off-street parking per year, lowering the cost of construction and making an additional 140,000 dwellings feasible in Sydney and Melbourne, the report said.
A more effective way to prevent new developments from clogging residential streets would be to better manage demand for on-street parking via parking permits, time limits and user charging, it argued.
A separate report found billions of dollars of public resource are being transferred to wealthy landowners each year through zoning changes amid efforts to tackle housing affordability.
The Albanese government’s fifth budget attempted to reshape Australia’s tax settings in favour of owner-occupiers over property investors.
But it neglected to address a “deep unfairness” at the heart of the nation’s housing policy, according to a report released by think tank Prosper Australia on Wednesday.
In recent years, state and territory governments have been easing zoning laws, including by raising maximum building height limits, in a bid to boost housing supply and ease affordability pressures.
While upzoning is widely lauded by economists as an effective measure to boost supply, report authors Tim Helm and Henry Williams estimated it was also giving away $11 billion per year in windfall gains to property owners.
When a government raises the height limit a property owner can build on their land, it was essentially giving away a public asset – the airspace above the land – for free, Dr Helm told AAP.
That results in an unearned increase in wealth for the owner.
For example, a 2016 report by Sydney’s Inner West Council found rezoning a block of land from industrial to eight-storey apartments increased the land value from $2 million to $10.7 million.
Dr Helm called on state governments to impose a 75 per cent levy on the increase in land value created by development rights, based on the ACT’s lease variation charge which has been in place in some form for more than 50 years.
The extra revenue could be used to abolish stamp duty for every first home buyer or build almost 200,000 new social housing dwellings and would not discourage new supply, he said.
By only applying the charge to the excess profit created by upzoning, the landowner still keeps the return from developing the property, plus an extra 25 per cent of the development right windfall.
Despite the levy, the ACT has built more dwellings per capita than any other jurisdiction over the past 15 years, with 12.2 dwellings per 1000 residents, compared to the national average of 8.2.
But the charge has long been a bete noire of the ACT property industry.
In practice, Property Council ACT executive director Ashlee Berry said the levy was adding to developers’ feasibility challenges and limiting new supply.
“At the end of the day, a developer is buying a parcel of land, putting in their investment, their capital and ultimately taking risks to deliver homes for other people,” she said.
AAP