Australia is spending more than $1 billion a year building car parking that apartment dwellers do not want, and a new Grattan Institute report argues scrapping mandatory minimums would meaningfully ease the housing crisis.
The report, Wasted Space, finds that minimum car-parking requirements imposed by state and local governments are adding between $62,000 and $137,000 to the cost of a typical two-bedroom apartment depending on the city — $70,000 in Sydney, $62,000 in Melbourne, $113,000 in Brisbane, $137,000 in Perth, and $95,000 in Adelaide, with higher figures reflecting stricter local minimums. Off-street car parking accounts for 13% of the built floor space of apartments in Sydney and Melbourne, and as much as 40% of those spaces sit vacant each night.
The report's core finding is that governments are forcing developers — and ultimately home buyers — to pay for parking most people simply do not need. About 40% of households in studio or one-bedroom apartments do not own a car, and 19% of two-bedroom apartment households are car-free. Despite this, most studio and one-bedroom apartments are required to include at least one off-street space.
"Many people who live in apartments don't want or need car-parking, but they are forced to pay for it anyway," said Grattan Institute CEO Aruna Sathanapally (pictured). In Sydney and Melbourne, there are more car spaces in apartment buildings than cars owned by residents.
Report co-author Dominic Behrens told The Guardian the burden falls hardest on those with the least: "If we got rid of these rules and built more housing, it's rents at the lower end of the spectrum that would go down the most, and so really the biggest burden of these rules falls on the people who have the least capacity to pay."
Beyond the direct cost to buyers, Grattan argues mandatory parking is suppressing housing supply. Its modelling shows that removing parking requirements could make approximately 140,000 more dwellings commercially feasible to build in Sydney and Melbourne today.
Co-author Ashleigh Chang described the reform as an immediate win in a market desperately short of homes.
"This is one of the small wins you can get when you are so desperately in need of homes right now," she told the Herald Sun.
Over the next five years, abolishing minimums nationally would avoid the construction of 86,000 unwanted car spaces — freeing $5.2 billion in construction resources that could instead deliver more than 9,000 additional homes. Experience from London, Seattle, and San Francisco shows developers still provide parking when minimums are removed, but at roughly half the mandated rate.
Grattan recommends removing all minimum car-parking requirements for new housing, managing on-street parking through permit schemes and user charging, and unbundling parking from homes so buyers pay only for what they need.
Industry reaction has been cautiously supportive.
REBAA president Melinda Jennison acknowledged "we have got to look at ways to make high-density development more feasible" but cautioned against pushing parking restrictions too aggressively.
UDIA national president Oscar Stanley urged consideration of how car use may change: "Will we all have one car? Two cars? Or will we subscribe to a car service? So where apartments are being built near public transport, it's good policy."
"Letting Australian homebuyers choose the car-parking they need will make housing cheaper, get more homes built faster, and create more walkable, cleaner, and better-designed cities," Sathanapally said.
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