Rising cost-of-living pressures, construction costs and record interest rate hikes have severely diminished consumer buying capacity, seeing more Victorians locked out of the housing market. To respond to this crisis, there are industry calls to reform development costs, taxes and planning regulations. It is also high time that another big cost factor was seriously looked at, car parking.
ABS census data provides compelling evidence that Melbournians in three-bedroom homes don’t own two vehicles. Yet developers, real estate agents, planning requirements and even purchasers insist on providing at least two spaces for these dwellings, largely without question.
To understand further, let’s look at the matter from both a developer and purchaser perspective.
The cost of a car space, or a second car space in the case of a three-bedroom dwelling varies depending on a range of factors including the cost of the land ($1,811/m2 on average across Melbourne but up to $13,915/m2 in Albert Park) but also construction methodology and materials. A wide range somewhere in the order of $50K-$100K per parking space appears to be about the assumed ‘cost’ of a parking space.
Across the 800,000 dwellings that are targeted to be built in Victoria over the next 10 years, an estimated 38% of these would be three-bedroom based on the current mix. Assuming that two car parking spaces are provided against an average Greater Melbourne car ownership level of 1.5 per three-bedroom dwelling would mean that developers will waste $7.6B-$15.2B, (yes capital B for billions!) on 152,000 car parking spaces that aren’t going to be used … and that’s just across the three bedders!
Devoting land and construction materials to unneeded car spaces denies this land an opportunity to be something better. Going from a single garage to a double garage, including the wider driveway means an extra 23m2 required, whilst an at-grade parking space and associated manoeuvring area takes up circa 30m2 each.
Better uses for this space are endless: extra living area, more or larger bedrooms, bigger gardens, or more dwellings/ higher yield! Less space devoted to unneeded parking means more flexibility in the design to make the dwellings more appealing or even create more dwellings altogether.
The other lever that could be pulled by developers is that spending less money on car parking will pass these savings directly to the purchaser, making dwellings cheaper.
Why would a developer do that? Cheaper dwellings means a bigger market to appeal to which should translate to quicker sales and reduced holding costs.
On the buyer’s side, spending $50K-$100K less on a dwelling means much less interest handed over to the bank over the life of the loan. An extra $50,000 spent on a parking costs $113,653 over the 30-year life of the loan ($63,000 in interest!).
Then there’s living cost savings. A household living with one vehicle instead of two will save massively. Based on a 2022 study by the RACV, the annual cost of running a medium-sized car is $16,352 per year.
Giving up the car, or even the second car, can be tough for some. But, with a little incentive, the transition can be made easier.
The emergence of carshare has filled the second car need for thousands of carshare members across Australia since carshare first arrived in the early 2000s.
According to GoGet’s 2023 Annual Member Survey, 39% of members have sold at least one vehicle or deferred purchasing a vehicle since joining the service. Councils are devoting more kerbside space to these initiatives and are popping up within more developments. Carshare is a far more cost-effective means of car usage compared to running a second car that might sit idle for 95% of its life.
On average, GoGet members spent just $511 each on carsharing in 2023, which includes all the costs associated with car use including fuel, insurance, registration, and maintenance.
Another mobility advancement getting people out of cars is the increasingly popular e-bike, with the most recent Super Tuesday count in Melbourne recording 20% of riders using an e-bike. The advent of e-bikes has also resulted in significant increases in female and older riders getting on a bike.
Australia has also caught onto the euro-inspired cargo bikes that are proving popular for getting the kids off to kinder or lugging shopping back from the supermarket.
Removing our reliance on cars should be possible for everyone but location still plays a significant role. The well-connected areas where it’s easier to live without a car have reliable public transport and nearby grocery stores, cafes, schools, pharmacies, and parks.
Melbourne has many of these areas that sit within the PPTN and close to Activity Centres. There aren’t too many places where a lesser car dependency wouldn’t make sense.
The anxiety experienced by developers, purchasers, and planning decision-makers around providing dwellings with less car parking could be alleviated if the right amount of parking was available.
The Goldilocks-inspired solution to the question of providing just the right amount of parking may well be solved by unbundling parking in developments. This is an arrangement where parking spaces for each unit in a development is rented, leased, or sold separately from the unit itself.
For example, a development could provide one space to each three-bedroom dwelling on-title and offer additional parking within a pool of unbundled parking to those who want additional spaces through a lease agreement. This arrangement works well for households that do not need a car space and can opt not to pay for this benefit without removing the ability for future purchasers to access parking.
Unbundled parking is increasingly featured in planning controls in Melbourne, including the Arden Precinct, Box Hill and West Melbourne. These advances in planning controls are paving the way for the right amount of parking that balances the needs of all stakeholders while promoting more sustainable and efficient urban development.
For developers to successfully market car-less developments, it’s essential to highlight the transport solutions available to residents.
Emphasising proximity to public transport hubs such as bus stops, train stations, and tram lines, can reassure potential buyers that they will have easy and convenient access to key destinations. Providing detailed information on these alternatives helps prospective buyers envision a seamless transition to a car-less way of living.
Before you toss the car-less option into the too-hard basket, it is worth giving it a serious go through your feasibility machine. Look at car ownership levels by dwelling type, number of bedrooms, and income level — this info is out there and freely accessible.
For more information about where less parking makes sense and solutions to facilitate a less car dependant development, reach out to mail@ratio.com.au.
