"Better Apartments" should be retitled "More Expensive Apartments"

"Better Apartments" should be retitled "More Expensive Apartments"
Craig YellandMay 19, 2015

On the surface, the Victorian Government’s “Better Apartments” discussion paper seeks to confirm what every apartment occupier would want to hear: mandating bigger, brighter, cross-ventilated apartments with great outlooks. What it fails to address is that this comes at significant cost.

The Government is using this discussion paper as a pre-emptive move to bring Sydney’s SEPP 65 strict planning rules to Melbourne. If this transpires, the industry will be faced with:

  • Massive job losses in the construction industry.
  • The cost per apartment will immediately increase by upwards of $150,000.
  • Rent will increase 10 percent per apartment.
  • The ability for inner-city sites to house our population growth will be reduced by 45% percent.
  • Development will be pushed to the fringe where infrastructure costs are greater.
  • A lack of new development due to diminished feasibility; a typical two-storey office building in an activity centre will be worth more than the site as an apartment development. Therefore it will not be developed.

In essence, supply of dwellings will drop dramatically, and we will be faced with a host of irreversible changes that will affect the industry and the end-user alike.

However, this situation is not a new one…Sydney’s apartment market stopped dead in its tracks for ten years after SEPP 65 was introduced. The market is only just starting to recover now, not because of any reversal of the planning regulations, but because the lack of supply has driven property prices so high that large one-bedroom apartments are fetching upwards of $700,000.

These inflated prices are the only reason why developers can now afford to develop projects which are in line with Sydney’s stringent rules and still offer viable financial returns. Basically, this means that without the inflated prices, developers could simply not afford to develop apartment projects under the planning laws, which has only further perpetuated the cycle of undersupply and market inflation.

Make no mistake – the implementation of design guidelines will remove your right to an affordable apartment in the area you want to live.

Some simple questions the paper fails to address:

Who is complaining that their rent is too low?

Who is asking for apartments to be more expensive?

We need to give apartment buyers a choice. If purchasers want a large one-bedroom apartment there are certainly plenty available. But if purchasers don't have the funds to afford a large apartment, by all means allow them the opportunity to purchase a home; don’t price them out of the market because they can’t afford what the Government is suggesting to mandate. At the end of the day, let the market determine what is desirable and what is a fair price for that dwelling.

In 2014, ‘The Commons’ apartment building in Melbourne was awarded by the National Architecture Awards as the “exemplar of apartment living”.

This project is a fabulous building, where 50 per cent of the apartments are south facing. If south facing apartments are deemed to be so undesirable, why did the project win the industry’s highest architectural award?

Without south facing apartments, anyone who wishes to live north of the city and desires a city-facing view, will simply not be provided the opportunity to do so.

And too bad if you want a view of our stunning bay - it is positioned to the south. If you purchase in a new development, you simply won’t be allowed to face it.

The last government turned off supply of medium density housing in our suburbs, leaving us with a deficit of 6000 much-needed new dwellings per year. If this government brings in minimum design standards they will all but shut down the apartment market in our regeneration and inner-urban areas. And with the projected population estimated to grow to 7.7 million by 2051, supply needs to increase, not diminish, in order to keep up with demand.

The new guidelines want to make you pay $10,000 more so your walk to the lift is 10m shorter.

Let’s not forget, this discussion paper has been drafted in a way that poses a series of loaded questions. Simply asking people if they would prefer a larger kitchen, or more internal space in their living room, is an irresponsible approach by the Government as it fails to address that these lifestyle choices come at a cost.

Larger apartments cost more money to build and they also decrease a project’s overall yield meaning these costs will all be passed on to the end user. Why don’t we ask legitimate questions that will force purchasers to think about their circumstances – questions such as ‘would you be prepared to pay $100 more in rent per week for a larger living room?’ is likely to illicit a more accurate response than simply ‘would you like to live in a larger apartment?’

The existing planning scheme in Melbourne rewards good design through discretionary height controls. It is a great system that has produced some fabulous buildings: ranging from high-end penthouses to affordable compact apartments.

On the other hand, Sydney’s planning scheme is overly prescriptive and complicated. The outcome has delivered large apartments, yes, but you need to be a millionaire to afford one. There is no such thing as an affordable apartment in Sydney.

The beauty of Melbourne’s market is the availability of choice, and the ability to allow most, if not all, professionals earning a modest wage, to one day own their own home. Let’s not take that opportunity away from Victorians just in the pursuit of short-sighted guidelines that will create more problems than it will fix.

Craig Yelland is a Director of Plus Architecture - an Urban.com.au Industry Hub member. With offices in Sydney, Melbourne, Brisbane and Christchurch, Plus Architecture is considered one of the leading architectural firms in multi-unit residential development. He lives in a south facing apartment with his wife and two children.

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