Why we shouldn’t have a minimum size for Melbourne apartments

Why we shouldn’t have a minimum size for Melbourne apartments
Why we shouldn’t have a minimum size for Melbourne apartments

For many months, there’s been an active debate between Melbourne’s apartment owners, tenants and builders about the need to regulate a minimum size for our apartments. One-bed apartments in Sydney must be at least 50m2, however more than three-quarters of new one-bed apartments being built in Victoria are equal or smaller than this.

So do we need new legislation to protect our state from a legacy of un-liveable dog boxes, or could we actually be better off with no minimum size regulation at all?

Planning Minister Richard Wynne released a discussion paper on inner city Apartments in May and has just finished a four month period of consultation. This means Victorian apartments could soon have new regulations on access to daylight, ventilation, accessibility, noise, and most notably, floor size.

While it’s too early to predict what will change, I think it would be a mistake to follow Sydney and set a new minimum size to increase the floor area of all apartments. Here’s why.

Housing in Melbourne is becoming increasingly unaffordable, particularly for the many new migrants and students who live in the CBD. With every additional square metre, the cost to build increases, and the property becomes out of reach for an extra group of people.

The average construction cost per square metre is about $3,100 for apartments in Melbourne. At the higher end of the scale, The Property Council of Australia has estimated that adding just 5sqm to the average one-bed apartment would increase costs by up to $45,000.

Instead of locking low-income people out of the market all together, our new standards should encourage innovative design to make smaller spaces more liveable. This means clever storage, larger windows, multi-purpose rooms and convertible fittings, such as fold-out beds for example.

Of course, ‘liveable’ is a completely subjective term too. A 40sqm CBD apartment might be totally unlivable for a couple who want to entertain guests or work from home.

However, a single student may find the same space perfectly adequate, particularly if they do most of their work, socialising and eating out of home as many CBD dwellers do.

It’s also important to remember the power of the market in protecting a minimum standard of living.

Apartments that are too small or too poorly designed for any lifestyle will struggle to sell or lease. Banks have also set their own lending limits for micro-apartments in recent years out of fear that the owner won’t be able to resell.

Whatever legislative changes are made, we have to recognise that Melburnians don’t all live the same lifestyle. The way that many of us live has changed dramatically in recent decades, and our lifestyles will become more diverse as demographics change and costs increase.

You could think of this as the loss of a gold standard, or a force that drives us to develop better ways of living. For example, I predict we’ll see more low-income people living in boarding home style accommodation in the coming years.

This co-habitation could reverse the worrying trend of social isolation, particularly in our major cities. By prioritising design and innovation over an arbitrary standard, our future homes can enable us to lead happier, more financially independent lives, but only if we have the right perspective.

Jim Tsaganas is a Melbourne based Building Surveyor with more than 20 years of surveying experience. He is currently the Managing Director of building permits provider Nicholson Wright, which he founded in 1996.

Jim Tsaganas

Jim Tsaganas

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bilby
Theboynoodle - your analysis seems spot on to me. In this debate about apartment sizes vs cost, it always seems to be assumed that land prices are a given, but they are not. As you say, if the land component makes up a good deal of the cost going into a development, then increasing controls on what can be built reduces the ability of the developer to pay for sites, and this in turn reduces the level at which the market can buy in to development sites. In this scenario, the increased costs of building are offset by reduced site values. So, unless developers plan to keep paying a premium for land over and above their own ability to make a profit, in the long run there shouldn't be a significant impost for buyers, even at the lower end of the market.
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theboynoodle's picture
Yeah.. it's Economics 101 stuff.. but the landowning classes have done a marvelous job of convincing the world that these basic economic knowns don't exist. It's the same trick that they've pulled to scare people about changes to negative gearing.. that rents will go up. It's rubbish. Rents are set according to the market rate, which does not change if landlords are paying more or less tax. Increased costs of being a Landlord drip back to the land value, just like increased costs of property development do. (this is a favoured topic/annoyance of mine, in case you hadn't noticed)
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theboynoodle's picture
"The average construction cost per square metre is about $3,100 for apartments in Melbourne." And what's the average selling price? $7,000? $8,000? It's getting on for $10,000 in places like South Yarra and South Melbourne. So there's plenty of scope for developments to make a commercial margin feeling larger apartments. The other half (or more) of the cost of the apartment is the land/location premium. That's profit to whoever sold the land to the developer.. and profit they did not earn. If you enforce development standards ( re size, amenity, design, whatever) then the value of the land falls accordingly and the only loser is the landowner who never earned that windfall in the first place (and is likely still sitting on a tidy profit anyway). I'm unsure about minimum sizes because I think that design is more important than size. A well designed 45sqm apartment is a better outcome than a poorly designed 50sqm one. Cost, however, does not need to come into it. Developers will build what they are allowed to build, for the market that they have. If their cost of doing so rises, then the value they pay for sites falls.. and yet they still get the sites because the landowner (short of waiting for someone to change the rules) isn't going to get a better offer.
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3000
I doubt the current wave of Asian immigrants and students are unable to afford what we are offering.
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bilby
Minimum apartment sizes will make apartments more expensive? Really? If so, wouldn't market sensitive developers the city over applaud such legislation? Or are we seriously entertaining the idea here that developers are driven by their social conscience?
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