Key Takeaways
- Australian cities are spending over $1 billion annually on off‑street car parks that remain largely unused.
- Parking minimums imposed by state and local governments raise construction costs dramatically: +$70 k for a two‑bedroom Sydney unit, +$62 k in Melbourne, +$113 k in Brisbane, +$137 k in Perth, and +$95 k in Adelaide.
- Roughly 40 % of apartment car spaces in Sydney, Melbourne and Brisbane sit empty each night; 19 % of two‑bedroom households and 40 % of one‑bedroom/studio households own no car.
- The Grattan Institute recommends unbundling parking (selling or renting spaces separately) and abolishing parking minimums altogether.
- Eliminating minimums could prevent 86,000 new car spaces over five years, saving $5.2 billion, and enable 140,000 additional dwellings to become commercially viable in Sydney and Melbourne.
- Alternative to minimums: residential parking permit schemes that limit street parking while exempting residents for a fee, addressing scarcity without over‑building.
Introduction
A recent Grattan Institute report titled “Wasted Space” reveals that Australia’s urban housing market is burdened by an expensive and largely unnecessary surplus of off‑street car parking. The study quantifies the financial waste, examines the policy drivers behind it, and offers concrete reforms aimed at lowering housing costs while promoting more sustainable transport patterns.
Scale of Unused Parking
The report finds that upwards of 40 % of car spaces in apartments across Sydney, Melbourne and Brisbane sit empty each night. This figure translates into a national annual loss exceeding $1 billion, as developers construct parking that residents neither want nor use. The inefficiency is not isolated to a single city; similar patterns appear in Perth and Adelaide, though the exact vacancy rates vary.
Financial Impact of Parking Minimums
State and local planning rules mandate a minimum number of off‑street parking spaces for new housing developments. These requirements inflate building costs significantly. For a typical two‑bedroom apartment, the added expense is $70,000 in Sydney, $62,000 in Melbourne, $113,000 in Brisbane, $137,000 in Perth, and $95,000 in Adelaide. Because developers rarely exceed the mandated minimum—building extra spaces would be financially unjustified—the cost burden is passed directly onto buyers or renters.
Who Actually Needs Parking?
Surveys cited in the report show that 19 % of two‑bedroom apartment households in Australia’s capital cities own no car, a proportion that climbs to 40 % for one‑bedroom and studio units. Consequently, a substantial share of residents are paying for a amenity they do not consume, while the broader market bears the inflated price tags associated with mandatory parking.
On‑Street Parking Concerns
Parking minimums were originally introduced to prevent new residents from flooding limited on‑street spaces. However, the authors argue that this approach “doesn’t work.” Instead of forcing developers to supply excess off‑street parking, councils should manage demand directly through residential parking permit schemes. Such schemes allocate limited on‑street spots to residents via time‑limited permits, often obtainable for a modest fee, thereby preserving street availability without over‑building.
The Unbundling Solution
A core recommendation is to unbundle parking from housing units, allowing car spaces to be bought or rented separately. This would let residents who need a park pay for it, while those who do not could opt out, reducing their housing cost. Unbundling aligns the price of parking with actual demand, discouraging the construction of surplus spaces and fostering a more efficient market.
Abolishing Parking Minimums Altogether
Beyond unbundling, the report urges the complete removal of parking minimum regulations. Modelling suggests that eliminating these rules over the next five years would avert the construction of approximately 86,000 new car spaces, translating into a national saving of $5.2 billion. Furthermore, the freed‑up land and reduced construction costs could make 140,000 additional dwellings commercially viable in Sydney and Melbourne alone, boosting housing supply and affordability.
Broader Urban Benefits
Removing mandatory parking would likely curb car dependency, encourage higher‑density, transit‑oriented development, and free up valuable urban land for housing, green space, or community amenities. By decoupling housing cost from unnecessary car infrastructure, cities can pursue more sustainable growth trajectories while addressing pressing affordability challenges.
Conclusion
The Grattan Institute’s “Wasted Space” report highlights a stark misalignment between policy‑driven parking requirements and actual resident behaviour. With billions of dollars wasted on unused car spaces and housing prices artificially inflated, the evidence supports a dual strategy: unbundle parking to reflect true demand and abolish parking minimums altogether. Complemented by targeted residential parking permit schemes, these reforms promise significant fiscal savings, expanded housing supply, and a shift toward less car‑centric Australian cities.