Can inner city apartments save us from sprawl?Posted: May 13, 2010
Here’s compelling evidence that inner city apartments are not substitutes for fringe development despite oft-repeated claims to the contrary.
The Age reported yesterday that the average size of new two-bedroom apartments under construction in Melbourne is just 73 m2, while the average size of one-bedroom apartments is 51 m2 and studio apartments 34 m2.
More than three quarters of the 5,600 units currently being built are located in central areas, mostly in the Melbourne, Stonnington and Yarra municipalities. A spokesperson from property group Oliver Hulme says that the median size of apartments in the inner municipalities is no smaller than those in outer suburbs.
I must say I’m staggered by how little space you get for your money. According to the report, the entry-level median price for newly built two-bedroom apartments is around $530,000. Corresponding prices for one-bedroom and studio apartments are $379,000 and $302,500 respectively. It seems inner city buyers subscribe strongly to the “location, location, location” maxim.
In contrast, the median house and land package in Melbourne’s outer suburban growth areas costs around $383,500 and the median dwelling size is 219 m2. It’s even cheaper in Cardinia in Melbourne’s outer South East, where the median dwelling is 186 m2 and together with land costs $334,500 on average.
Clearly the inner city and the outer suburban growth areas are entirely different markets! The average size of apartments is probably reduced by the current high rate of social housing construction but I doubt that’s significant enough to explain the enormous difference between the two markets.
Apartment construction in the inner city is primarily driven by one and two person households without dependents. The growth areas on the other hand are driven by families (whose average size appears to be increasing).
The fact is the latter households simply cannot afford the inner city even if we assume they aspire to it ( which I don’t – I expect most of them prefer garages to galleries).
As I’ve argued before, there are good reasons to promote increased densities in established suburbs without resorting to the fiction that inner city redevelopment will reduce sprawl. Those reasons relate to improving affordability and housing choice for Melburnites who want to live in more accessible locations than the growth areas.
I suspect that a significant proportion of new growth area settlers would happily live in a more central location if a suitable compromise could be found on space and price. However that compromise is much more likely to be realised in the established parts of the existing outer suburbs and possibly some parts of the middle ring suburbs than in the inner city.