Sydney apartments costing $150,000 more than Melbourne apartments

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A detailed survey by the Urban Taskforce has found that Sydney design standards are adding $150,000 to the cost of the average apartment.

Sydney apartments are costing far more than those in Melbourne and Brisbane mainly because the NSW planning system requires much higher standards.

The Sydney standards are controlled by the State Environmental Planning Policy 65 and the NSW Government's Apartment Design Guide which set standards for areas, solar access, cross ventilation and other requirements that end up adding around $150,000 to the purchase price of an average 2 bed apartment compared to a Melbourne equivalent.

With housing affordability being such a big issue in Sydney we thought we should check out the relative standards that apply in Sydney compared to Melbourne and Brisbane.

We commissioned Sydney planners HDC along with architects Turner Studio and Quantity Surveyor John Ferrarin to measure the difference between the standards required between the various cities in Australia.

We were amazed at the results of this independent research that demonstrated that the average two bedroom, two bathroom apartment in Sydney that is costing $750,000 could be bought for $600,000 if Melbourne standards were applied.

The NSW / Sydney standards are from well-meaning planners wanting big apartments that get lots of sunshine but these amenities come at a cost that is forcing many purchasers out of the market. The apartment dwellers of Melbourne and Brisbane are not very different from those in Sydney so the Urban Taskforce believes we should relax the Sydney standards particularly in urban precincts so more people can live an urban life in apartments.

The biggest difference is in the square metres required for a two bed apartment with two bath rooms. Sydney standards require 75 square metres but in Melbourne 65 square metres is achievable. At the average Sydney sale price of $10,000 a square metre this adds $100,000 to the cost of an apartment.

In Scandinavia a two bedroom apartment can be even smaller at 55 sqm by using clever design.”

The other cost saving elements include reducing the requirements for cross ventilation, solar access in winter and building depth requirements which add $24,000 to the sales price in Sydney compared to Melbourne.

A combination of more flexibility for above ground car parking that is well screened, excessive ceiling heights for kitchens, and lower floors along with additional open space all add up to a further $33,000 difference in costs over a Melbourne equivalent. All up this amounts to more than $150,000 that Sydney apartment purchasers pay more than the Melbourne standards require.

On top of this the higher and less flexible Sydney standards are stopping a lot of residential projects from being built.

The requirement for 70 percent of apartments to get solar access in mid-winter for 2 hours between 9am and 3pm means many housing proposals in high rise urban areas will be rejected by zealous council planners. In Melbourne and Brisbane, where there are no such solar access requirements, high rise apartments will be feasible.

The Urban Taskforce believes that the NSW apartment controls must be relaxed for projects that contribute to 'housing affordability' so that $150,000 could be saved on the purchase price.

We also believe the NSW Apartment Design Guide should have an 'Urban Core' section that reduces standards in these locations to Melbourne levels so that urban high rise apartments can be encourages to help with housing supply.

The Urban Taskforce has an expectation that changes may be supported by the NSW Government as the recently released 'Plan to Improve Housing Affordability' included as Policy 18 'The Minister for Planning will issue guidelines to facilitate smarter and compact apartments.'

The former Governor of the Reserve Bank of Australia, Glenn Stevens, in his report on housing affordability, referred to the $150,000 additional cost figure and stated that 'If changes to regulations and charges could alleviate this, the price of shelter could, in time, be materially lower.'

The Urban Taskforce is keen to work with the NSW Government to get the appropriate balance between housing affordability and amenity standards. We believe that part of the reason that apartments are so much more expensive in Sydney compared to Melbourne and Brisbane is due to excessive amenity standards.

Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted here.