The Age has published a useful summary of a new report by the Melbourne City Council, which slams the increasing number of ‘shoe box’ apartments being constructed in Melbourne’s CBD, which would breach the minimum size requirements of many other international cities:
A scathing report from Melbourne City Council shows some of the city’s newest developments are up to 10 times as dense as permitted by law in some of the world’s most urbanised centres.
Sydney, London and Adelaide all have rules that ban new one-bedroom apartments smaller than 50 square metres. But in Melbourne, 40 per cent of the city’s newest apartments are smaller than this.
The boom in shrinking homes is being driven by a market that satisfies the needs of overseas investors at the expense of residents, according to the Melbourne City Council’s draft housing strategy.
The article follows a series of reports in The AFR in March (here, here and here) on the nascent glut of high-rise apartments being constructed across Australia’s major capital cities, which risks morphing CBDs into “high-rise ghost towns”.
The reality of the situation is that apartment building is becoming a new “export” industry for Australia, with many high-rise developments now targeted at foreign investors rather than local buyers.
While I have no issue with such sales, policy makers should not delude themselves that such developments are an answer to Australia’s housing affordability woes or perceived housing shortages. As noted by the City of Melbourne, the size of apartments has been shrinking, making them unsuitable for most local buyers. It’s findings are backed-up by a recent report in The AFR, which claimed that the average size of a new apartment has shrunk from 60 square metres five years ago to between 42 and 45 square metres today (and falling).
Moreover, many of the apartments sold to foreigners are being kept empty, therefore, are often not actually adding to the supply of rental accommodation.
Part of this trend towards small apartments is also been driven by urban consolidation policies pursued by Australia’s various levels of government, which have forced-up land costs and made the development of free-standing homes unaffordable and/or less attractive to would-be buyers. The recent release of land price data from RP Data illustrated this point, showing the median price of fringe lots rising by nearly 500% over the past 20 years at the same time as lot sizes have shrunk (see below charts).
Sensible housing policy is about lowering the systemic cost of housing and providing buyers with maximum choice and a myriad of housing options. Not the current situation where new buyers are required to choose from an expensive inner-city shoe box or an inflated postage stamp-sized lot on the fringe.
