Wasted Space: The Hidden Cost of Parking Mandates

A new report from the Grattan Institute, titled "Wasted Space," reveals that minimum off-street parking requirements imposed by Australian state and local governments are driving up construction costs and creating a glut of unused parking spaces.

The report estimates these mandates will add $5.2 billion to the cost of building 86,000 parking spaces over the next five years—spaces that are predicted to remain empty.

Financial Impact on Housing Costs

The financial burden of these requirements falls directly on homebuyers and renters. The report calculates the specific cost added to a two-bedroom apartment in each major city:

• Perth: $137,000
• Brisbane: $113,000
• Adelaide: $95,000
• Sydney: $70,000
• Melbourne: $62,000

"We've required too many parking spaces for a long time, and as a result, we've got a lot more than we want, need, or use, particularly under apartment buildings." — Dominic Behrens, report author

Additional analysis from Source 2 provides a wider range for total cost increases per unit: between $46,000 and $132,000 in Sydney, and between $41,000 and $114,000 in Melbourne.

Crucially, the Grattan Institute reports that developers rarely construct parking spaces beyond the required minimum, meaning these costs are a direct result of regulation, not market demand.

Unused Capacity: Parking Lots That Sit Empty

The report highlights a striking mismatch between supply and demand. Up to 40% of parking spaces in apartment buildings in Sydney, Melbourne, and Brisbane are empty each night.

Even more telling:

• In Brisbane’s inner city, only two-thirds of spaces are occupied at night.
• In middle-ring suburbs of major cities, there are now more parking spaces than registered vehicles.

"Emotionally we've got this very deep connection to driving and what we can see as being a right to park." — David Mepham, author of Rethinking Parking

The Potential Impact of Reform

The Grattan Institute modeled the effects of abolishing minimum parking requirements. The results suggest substantial benefits:

• 140,000 additional dwellings could become commercially viable in Sydney and Melbourne.
• In Sydney, council areas such as The Hills, Sutherland, and Northern Beaches could support between 2,000 and over 10,000 new homes each.
• In Melbourne, areas including Brimbank, Manningham, Maribyrnong, and Melton could each gain between 2,000 and 10,000 homes.
• Removing the rules could save $1 billion annually on unwanted car parks and prevent the construction of over 86,000 unnecessary spaces.

The report also notes that these rules reduce housing supply and increase rents, disproportionately affecting low-income renters.

Recommendations

The Grattan Institute offers two key policy recommendations:

1. Unbundle parking: Allow car parking spaces to be bought or rented separately from residential units, rather than being automatically included in the cost of every home.
2. Manage on-street demand: Replace parking minimums with residential parking permit schemes, time limits, and user charges to more efficiently allocate curb space.

Context and Background

Minimum parking requirements were introduced in the 1950s and remain common in local council planning rules across Australia.

The report points to successful alternatives, such as the Nightingale 2.0 development in Fairfield, Melbourne, which used ground floor space for retail instead of parking. It also highlights New Zealand, which eliminated parking minimums nationwide in 2020.