MacroBusiness reports on Intrapac chief executive Max Shifman's Age opinion piece arguing Victoria's activity-centre apartment drive is unviable, because apartment construction costs three to four times more per square metre than townhouses or houses, leaving only premium downsizer stock feasible. Charter Keck Cramer shares the concerns.
As I wrote in The Age: “not feasible to build and sell, especially at scale”
I also said: “It costs at least three times as much to build a square metre of a new apartment compared with a good-quality townhouse, or four times more than a new detached home”
And I added: “This means the only apartments that generate a suitable return on investment are premium, boutique apartments targeted at wealthy downsizers”
I went on to say: “This explains the growing chasm between the Victorian government's aspiration to build thousands of “well-located” homes in established suburbs and the reality of delivering them”
I also made the point: “across Australia, new apartments cost significantly more to build or buy than an equivalent new townhouse or detached house. The price of materials, high building standards, and labour costs all contribute”
And finally: “Construction costs have risen so much that developers now need to sell apartments at the rate of $14,000 per square metre or more for a project to be feasible – about 40% higher than selling rates before COVID”
I also noted: “This translates into a small new one-bedroom apartment of about $650,000, a two-bedroom apartment of 70 square metres at nearly $1 million, or a reasonably sized three-bedroom “family” apartment at about $1.5 million or more”
I went on: “Victorian government is selling an affordability dream to young people that cannot be realistically delivered”
And I said: “speeding up planning in these activity centres will deliver little benefit if the result is a housing product that costs too much and doesn't meet the utility of buyers”
MacroBusiness, 25 October 2024 — Read the full article