Sydney apartments cost $150k more
ONEROUS design standards are making Sydney apartments more expensive than Melbourne and Brisbane, adding as much as $150,000 to the price of apartment in the harbour city when compared to other capital cities.
Urban Taskforce’s CEO Chris Johnson said Sydney apartments are costing far more than those in Melbourne and Brisbane mainly because the New South Wales 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 two-bed apartment compared to a Melbourne equivalent,” he said.
The average two-bedroom, two-bathroom apartment in Sydney costing $750,000 could be bought for $600,000 if Melbourne standards were applied.
“Sydney standards require 75sqm but in Melbourne 65sqm 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 55sqm by using clever design,” Johnson added.
Other cost saving elements include reducing requirements for cross ventilation, solar access in winter and building depth requirements, that Johnson said add $24,000 in Sydney.
“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,” he continued.
Meanwhile, the overheated residential markets of Sydney and Melbourne underpinned further increases in the median house price of Australia’s capital cities in the March quarter.
New data from the Real Estate Institute of Australia showed the weighted average median price for houses increased by 2.9% over the March quarter, and for other dwellings, including units and apartments, by 2.5%.
The REIA research showed the weighted average median price for houses increased to $763,892, and for other dwellings to $587,290.
Melbourne saw the largest increase over the quarter for both sectors, at 7.6% for houses and 3.8% for other dwellings.
REIA president Malcolm Gunning said the median price increase was also driven by Darwin’s market.
“Median house prices decreased in Brisbane, Adelaide, Perth, Canberra and Hobart and, median prices for other dwellings decreased in Brisbane and Darwin,” he said.
SQM Research data from May showed Sydney’s median asking price of $1.369 million for houses and $848,500 for Melbourne, and a respective $700,000 and $485,000 for units.
The REIA data showed median rents for three-bedroom houses increased in Sydney, Melbourne, Brisbane, Adelaide, Hobart and Canberra, led by Hobart with 5.7%, with decreases in Perth and Darwin.
Hobart also saw the largest increase for two-bedroom other dwellings, at 7.5%. Melbourne and Perth median rents for other dwellings remained steady while it decreased in Darwin.
According to SQM Research, Hobart’s annual house rent growth of 3.0% to $361 per week as of May is ahead of Sydney’s and second only to Melbourne. It also recorded a 6.5% increase in unit rents over the month period to May.
Its data has also showed asking house rents in Sydney had grown over 12 months by 2.9% to $743 per week, and units by 3.2%to $521 per week.
Melbourne’s lifted by 0.2% for houses in the month to May 12, to $514 per week, and 0.3% for units to $396 per week, despite vacancies easing slightly to 1.6%.
SQM Research managing director Louis Christopher said the numbers reflected still-tight rental markets in the nation’s biggest cities of Sydney and Melbourne, as well as the nation’s capital.
“We are nowhere near to seeing any signs of an oversupply of units in either inner-city unit market,” he said. “While the rise in vacancy rates may give tenants a slight reprieve, the trend is still up for asking rents in Sydney and Melbourne, to the point where they are unaffordable for many people.”
The REIA data showed vacancy rates either remained steady or saw 0.1% change in most capitals over the March quarter. Only Perth had its vacancy rate increase.
“The vacancy rate ranged from a high of 7.1% in Darwin to a low of 1.7% in Canberra, which had the tightest rental market for the quarter,” Gunning said.
SQM Research said national residential vacancies rose marginally over the month to May 12 to 2.4%, steady over the past year, to a total of 76,959.
Australian Property Journal