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Editorial: August 2007
housing depends on a vision for our cities, try ‘opportunity urbanism’
Suburbia: reports of its death are greatly exaggerated
A much quoted assertion in the housing debate came from
Rory Robertson, financial
analyst at Macquarie Bank. ‘There’s this never satisfying compromise
between proximity, being close to the action’, said Robertson, ‘and the
size of houses and yards and as our cities get bigger, literally,
there’s less room for everyone to be living in nice houses with big
Presumably, by ‘bigger’ Robertson means more populous. Hence population
growth, according to his formula, plus wanting to be ‘close to the
action’, equal the end of home ownership for the masses.
Australians have again been subjected to a round of claims and
counter-claims about housing affordability. The issue is now deeply
entangled in a pre-election web of partisan and federal-state rivalries.
Clearly, the contenders are partial to one economic doctrine or another,
but they also bring clashing assumptions, if not to say prejudices,
about how cities work.
A champion of the ‘land-supply-is-irrelevant’ school, Robertson
expresses a timeworn, monocentric conception of urban development. He
imagines a single core ‘close to the action’. There is little sign he
fully understands how fast this pattern is fading away. Writing that
‘what most of us aspire to is better-located homes - homes that are
closer to the centre of the city‘,
Ross Gittins, the
SydneyMorning Herald’s economics editor, is stuck in the
same time warp.
Like many others, Robertson and Gittins lurch from the incomplete
premise that inner suburbs are attractive to home buyers, to the flawed
conclusion that most are choosing medium to high density living or
renting over low density ownership. The initial question, though, isn’t
where buyers want to live, but how. Analysts and commentators, mostly
well-paid professionals, presume too much about consumer preferences.
Surveys and historical experience confirm that most Australians aspire
to own single family, detached dwellings on sizable blocks. This
majority may be defined by parameters like age, family size and
Only then comes the question of where buyers want to live. In an ideal
world without constraints, purchasers would opt for upmarket,
well-serviced localities close to established infrastructure. In the
real world, this is beyond their reach - at least in most cases. It
doesn’t follow, however, that they are content to rent, or settle for
high density units or town houses. They will pursue their preference to
the periphery - especially low and middle income earners - providing,
and this is the crucial condition, price levels justify the trade-off.
This brings us to the current state of the market. The likes of
Robertson and Gittins assume prices won’t ever warrant the trade-off.
They cite the case of outer western Sydney, where developers are
struggling to attract buyers though values have been sliding since 2004.
At the same time, inner suburban prices are stable or rising.
The crucial point, however, is that outer suburban prices have declined
from historically high peaks (also high by world standards, as the Demographia survey
makes plain). And prices remain unpalatable to borrowers, especially in
a phase of escalating interest rates. New houses are still coming onto
the market for at least $350,000 in western Sydney. That’s too high for
low and middle income earners. Why are prices unacceptable when the
market is so weak? If there is ‘no demand’, as the NSW Government puts
it, why haven’t prices collapsed? Why haven’t supply and demand produced
an equilibrium price? These are the great unasked questions.
The answer, of course, is that zoning regulations, resulting in
artificial scarcity, state and local government charges, and developer
on-costs have placed a floor under prices. According to
Alan Moran of the
Institute of Public Affairs, Sydney zoning controls invest greenfields
lots with a value of around $115,000, while charges come to $122,000 and
development on-costs range from $40,000 to $60,000. The Housing Industry
Association’s estimates are comparable.
These claims are contested by the NSW Government. Nevertheless, there is
a compelling case for review, not just of the amounts estimated, but,
more importantly, of the planning philosophy behind them. It’s true that
housing is different from many other products. Supply comes to the
market on certain conditions. Lots must be connected to roads,
electricity, water mains and sewerage. But current zoning restrictions,
charges and on-costs go far beyond these essential amenities.
Over recent decades, the field of town planning has embraced a
distinctly paternal agenda. According to this worldview, the traditional
suburb was a wasteland of social isolation, alienation and dysfunction,
not to mention sheer ugliness. For a variety of reasons, state
governments have, on the whole, bought this line. Forget that it doesn’t
match the experience of millions who flocked to suburbia during the
post-war era. Residential development must only proceed, according to
the planners, on sites enveloped by a full-blown network of
infrastructure and services.
Any responsible government will aim for equal access to social services
over time. But there is another powerful consideration. Is access to
full-blown infrastructure and services compatible with general home
ownership? Is it reasonable for governments (state and local) to say the
public can have home ownership with the full suite of infrastructure and
services or not at all?
Debate is raging on whether developers and buyers or consolidated
revenue should cough up for these expenditures. There is a more basic
objection, however. When charges and on-costs are earmarked for
discretionary priorities like ‘community facilities’, libraries,
swimming pools, playgrounds, child care centres, public transport and
certain energy and water saving devices, government is pre-empting
lifestyle decisions that rightly belong to home buyers themselves. It’s
also foreclosing on a trade-off between superior amenities and the
prospect of home ownership.
People should be free to make their own choices.
‘Engines of upward social mobility’
Our housing affordability crisis emerges from the debris of a failed
planning ideology, embodied in the term ‘environmental, social and
economic sustainability’. This common, if nebulous, phrase denotes a
seamless garment of mutually reinforcing wisdom. In practise
‘environmental sustainability’, as conceived by most environmentalists
and planners, is far from compatible with social and economic
sustainability (whatever that may mean).
The economic success of our cities rests on different foundations than
it did two decades ago. Aside from the special case of zones directly
plugged into the global economy, like the concentration of advanced
business services and high-tech innovation known as Sydney’s ‘global arc
corridor’, economic vibrancy is associated with geographical dispersion.
The impact of globalisation on regulation, taxes, and the growth of the
services economy, together with modern communications and transport
systems, have liberated businesses. Today economic opportunity is more
often a function of mobility, abundant cheap land and population growth.
Urban theorists have long discussed
‘globalisation and the rise of
city-regions’. According to this line of thought, ‘a
world-wide mosaic of large city-regions seems to be overriding an
earlier core-periphery system of spatial organization’. The world’s
growth cities display polycentric and decentralised patterns of
commercial development and residential settlement. Recent commentary in
pointed out that the fastest growing localities in the United States,
recorded in the latest census, were suburbs of sun-belt cities like
Sacramento, Phoenix and Dallas-Fort Worth, where ‘geographic growth is
almost completely unregulated’.
Examining another booming sun-belt city, Houston, urbanist Joel Kotkin
proposes a theoretical perspective he calls
‘Opportunity cities’, he explains, ‘generate economic opportunity across
the entire income spectrum, for all racial and ethnic groups, and across
all education levels’. The crucial ingredients are job growth and basic
affordability, especially housing affordability. ‘In contrast, as other
communities become built-out and reach their development boundaries, the
lack of available land constrains their ability to provide new,
reasonably-priced housing options’.
The notion of an urban core ‘where the action is’, as Robertson puts it,
is misconceived. ‘During the last half-century’, writes Kotkin,
‘telecommunications and transportation revolutions have made it possible
for [major corporations] to locate themselves away from traditional
business centres’. Increasingly, this trend is observable across our
Earlier this year the Australian Financial Review reported that
‘average office rents in the nation’s suburban office precincts rose 8.4
per cent last year’, and recently ran a report of ‘32 office buildings
changing hands in the Sydney suburban market during the financial year
at prices in excess of $5 million - a total turnover of $900 million’.
Last month the country’s largest general insurer, Insurance Australia
Group, announced plans to relocate a number of divisions from Sydney CBD
Contrary to the myth of desolate, dormitory suburbs, reached by tedious
commutes from a distant city centre, more outer suburban residents are
working closer to home. Kotkin points out that
…for most residents of newer cities, such as
Houston, the automobile will remain the prevailing means of transit. One
explanation is that most jobs are not clustered around a rail line or
bus route, but rather are scattered throughout a metro area. This makes
the kind of point-to-point travel offered by the automobile particularly
These dispersive trends have accelerated during recent years, leading to
the phenomenon that The Brookings Institution’s Rob Lang has called
“edgeless cities”, where employment becomes more spread out and less
accessible to traditional mass transit.
Contemporary fringe suburbs are more diverse, both socially and
economically, than their counterparts of the early post-war era. This is
as much a function of economic trends as of planning measures, if not
more so. And residential development is vital to their prosperity, along
with spin-off industries.
Reporting on the downturn in Sydney’s growth over 2006,
William Mitchell andAnthea Bill of Newcastle
University stress that ‘the housing boom stimulates economic activity as
households renovate and expand their consumption of household items (as
they feel wealthier)…Then as the housing market slows the broader
activity associated with it (construction, retailing, finance and
insurance, manufacturing, etc) also slackens’. Just as resources are
driving the northern and western states, residential development is
integral to the whole south-east Australian region. In this economy,
restrictive planning can generate ripples of social distress.
Inevitably, planners will retort that opportunity urbanism just isn’t
environmentally sustainable. Some will misapply the concept of
‘ecological footprint’, the amount of land area required to sustain a
particular lifestyle. It is often said, for instance, that Sydney’s
footprint is equivalent to forty-nine per cent of New South Wales. Yet
this shibboleth has been
slammed, as it wrongly
assumes a portion of land can only be used for one purpose at a time.
Others claim suburban growth will send carbon emissions soaring. In a
field where pseudo-scientific notions jostle for attention, ‘ecological
footprint’ has lost ground to ‘carbon footprint’. Bear in mind that
Australia produces only 1.5 per cent of global emissions. Also consider
Patrick Troy and Bill Randolph
of the City Futures Research Centre found ‘tenants and those in flats
are in less control of their immediate accommodation and have much less
capacity to effect a meaningful transition to lower energy use’. Little
wonder that according to the
Australian Conservation Foundation’s
consumption atlas, ‘people living in Australia’s wealthiest inner-city
suburbs are responsible for more than double the amount of greenhouse
pollution than households in less affluent areas’, such as low density
None of this will detach planners from their dreams of compact
Elite objections aside, however, most Australians will agree there are
lessons from the success stories of the American sun-belt, considering
similarities in climate, population densities, land resources, values
and lifestyles. After all, Australians too have cherished their cities,
in Kotkin’s resonant phrase, as ‘engines of upward social mobility’.