Urban density in all the wrong places

ScreenHunter_21 Apr. 10 19.29

By Leith van Onselen

A few weeks back, I received a document from the Boroondara Council in Melbourne highlighting changes under Plan Melbourne – Melbourne’s new metropolitan planning strategy. The documents explained how Melbourne’s urban growth boundary (UGB) would be fixed, effectively turning it into a greenbelt (because that has worked so well in the UK…not!) and how the leafy desirable eastern suburbs will be protected from development, helping to maintain the area’s character and amenity.

Of particular note, the document explained how subdivision’s would be limited to two homes per block. Many of the lots around Boroondara are fairly large (over 600sqm), and there has been quite a few triple sub-divisions close by to my house, so the planning changes could work to restrict urban consolidation.

While the changes in Boroondara are beneficial to me – I own a detached house in the area and my amenity and land values will be protected – you have to wonder whether Melbourne is indeed “planning to fail”, as David Collyer eloquently put it last month.

The way I see it, the changes under Plan Melbourne are likely to exacerbate urban sprawl in Melbourne, rather than reduce it, thus eliminating many of the purported benefits from the plan such as “20-minute neighbourhoods”.

These perverse outcomes will occur because the measures aimed at excluding growth from one part of Melbourne – e.g. Boroondara and other established areas as well as via the fixed UGB – will naturally generates pressure to accommodate it elsewhere, leading to intensified development either on the fringe or in exurban and underdeveloped jurisdictions well beyond the metropolitan limits.

As argued last week, the fixing of Melbourne’s UGB will likely encourage many lower income households to ‘leapfrog’ the boundary and settle in far flung commuter towns where developable land is available and housing is more affordable. In such instances, urban sprawl will be exacerbated and reliance on cars and energy use will be increased. Since Melbourne’s UGB was first introduced in the early-2000s, we have already seen widespread development in communities well beyond the UGB in places like Wallan, Drouin, Warragul, Bacchus Marsh and Gisborne (see here for details), and this trend is likely to intensify as then changes under Plan Melbourne bite.

A related unintended consequence of Plan Melbourne is that ‘densification’ will also be pushed away from the inner and middle suburbs and onto the fringe, where there is less access to employment and amenities. The reason for this is that the price of land will be forced up so much by the growth constraints that households will be less able to afford the ‘premium’ price commanded by the inner areas, and will instead be forced to locate at ‘less unaffordable’ but also less efficient locations. Essentially, budgets will be squeezed so hard by the higher land prices that households will be forced to trade-off both space (smaller homes) and location efficiency (i.e. living further out).

This phenomenon will likely be reflected in denser fringe suburban developments, whereby postage stamp sections will be crammed even tighter together, complete with narrow streets and and minimal public green space.

To see what might be in store for Melbourne, one only needs to look at Portland, Oregon – often cited as a model for “smart growth” (urban consolidation). There, urban consolidation policies have driven increased density at the fringe of the city but not nearer to the CBD, as revealed by Alain Bertaud, senior research scholar at the NYU Stern Urbanization Project:

Market forces would normally increase population density around the CBD and decrease it progressively toward the suburbs…

Portland developed the concept of an Urban Growth Boundary (UGB), which limits for 20 years the area within which the city may develop…

Most neighborhoods resist any attempt at increasing significantly the current density and developers are uncertain about demand for higher density residential areas close to the center. As predicted, land prices are going up because of the supply constraint imposed by the UGB, developers respond by developing higher density housing in the vacant areas between the limits of the current built-up area and the UGB…

In the long run, the higher density which is built-up on the vacant land along the UGB will increase the accessibility of suburban shopping malls at the expense of the relative accessibility of the CBD. This is not the outcome that the planners intended.

ScreenHunter_324 Nov. 20 08.42

In short, Melbourne’s new planning blueprint is indeed planning to fail, with the end result likely to be: 1) higher land prices and less affordable housing; and 2) increased sprawl as the population is increasingly forced to live on the fringe or in far flung exurban commuter towns. The changes will also have particularly pernicious distributional impacts on lower socio-economic groups.

unconventionaleconomist@hotmail.com

www.twitter.com/leithvo

22 Responses to “ “Urban density in all the wrong places”

  1. Labrynth says:

    Melbourne already has some of the lowest yields Australia wide.

    To buy in Melbourne is a pure speculation play.

    After tax many of these properties are costing landlords $20k out of pocket. Couple that with interest repayments and outgoings the property needs to grow at at least $80k per year to break even.

    • The Claw says:

      Couple that with interest repayments and outgoings the property needs to grow at at least $80k per year to break even.

      WRONG!

      The rent could rise until the property breaks even.

  2. My mother-out-law is shattered by Boroondara’s new zoning rules. She had visions of razing the family home for ten stories of rat holes. Now she can only do two townies. Council just cost her a motza.

    Boroondara is also planning to buy houses to demolish for parkland – a double boost to land prices (increasing demand, amenity). See: http://www.prosper.org.au/2011/12/07/a-walk-in-the-park/

    This leafy inner urban delight is lavishly serviced by public transport with first class amenities – outstanding public and private schools, libraries, pools – all council facilities fully paid for and hence remarkably low council rates.

    Reasonable houses are a million plus and I can live here for $600 a week.

    I see contradictions wherever I look.

  3. Turnitup says:

    It’s intellectually bankrupt to call anyone who has a different view a troll.

    I do know that he lives in the same place but I’m not sharing how I know.

    I do not understand the other part of your question about the same rent. He claimed last year that he pays $500 a week to live in NB, now he claims $600. It’s not the same. It’s a $100 difference.

    • So what? His rent might have increased by $100 over the past year. How does that change anything? Stop taking up space on this blog writing useless comments. Either add some context to the debate or forget it.

    • Turnitup, you are a troll. You are paid to appear in this forum to deflect discussion from certain landowner interests and reframe issues for advantage. You exploit the anonymity of an avatar to achieve these ends. If trapped, you merely have to change your avatar. You do not have a shed of credibility with this intelligent audience.

      So you know where I live, an easy thing to discover. I am a citizen. I am a free man. Everything I say is on the record and anyone reading what I write knows this.

      There are no contradictions in what I say. I give warning about these troubled times. I want tax reform. And I want to free my country from this bloody property Ponzi. These are higher ends than yours.

      Don’t Buy Now!

      • Turnitup says:

        @DC, I’ve said before that I think your cause is a noble one. But it loses some its nobility when you fail to act with integrity. I’ve called you out on this before and you failed to adequately address it at the time. BS is BS regardless of which side of the fence it comes from.

        I am not paid by anyone to write in here. Turnitup! I too am a free man and a citizen and all of that. I’m not sure what you mean about being trapped. I’m not trapped and do not change my avatar.

        @UE, if you don’t like my comments, don’t read them. I promise to do the same.

      • “@UE, if you don’t like my comments, don’t read them. I promise to do the same.”

        This is my site. You are a guest (not even a paying member). Commenting is a privilege not a right. Write something useful and which adds to the topic discussion, or don’t write at all. Simple as that.

      • My cause is way more noble than yours, troll.

        As for the conceit that somehow you are in a position to ‘call’ anyone on anything, I blow you a raspberry. Get off this site and stop wasting everyone’s time.

      • Gunnamatta says:

        Geez, that Turnitup fella gets more credible by the minute

        First he wants to compare houses and addresses with half the commenters here in some form of weird ritualistic form of psychic masturbation.
        Then he wants to slag off anyone questioning whether buying houses is the right thing to do.
        Then he wants to want to pollute discussion of housing by talking about credit cards.
        Then he wants to tell someone who writes half the posts where to get off
        Then he gets uncovered for not even being a paying member.

        Head meet cloaca. And he said something about he works with kids

      • Turnitup says:

        I initially thought Gunna’s reply didn’y warant a response, but as it full of untruths, I thought I should set the record straight in order to preserve my highly-regarded reputation on MB.

        “wants to slag off anyone questioning whether buying houses is the right thing to do” Absolute baulderdash. I also question whether buying is the ‘right thing to do’, and believe it depends entirely on your circumstances.

        “wants to want to pollute discussion of housing by talking about credit cards”. Not at all. This is useful advice and an elephant in the room. People are paying 15% (?) on purchases they made 7 years ago on something they didn’t need then, and in the next breath can’t afford housing. This is insane.

        “he wants to tell someone who writes half the posts where to get off”. Not at all. I didn’t realise UE owns the site. Still not sure how I was supposed to know this. Not sure how saying ‘don’t read my posts if you don’t like them’ is telling someone where to get off. We must have gone to different schools.

        “he gets uncovered for not even being a paying member”. Uncovered? Really?

        And about the credibility claim…. I am not out to win any credibility, but rather to present a point of view. TBH, I’d have thought you guys would have welcomed a devil’s advocate. Instead you name-call and personally insult (something I’ve chosen not to do as I believe it to be benaeth me). It looks as thought you want a community full of people who think in a uniform way. Yet I’d have thought that’s what we should be fighting against. As one observant chap wrote a week or 2 ago, unless you have an axe to grind, people give up on this site.

      • drsmithy says:

        Not at all. This is useful advice and an elephant in the room. People are paying 15% (?) on purchases they made 7 years ago on something they didn’t need then, and in the next breath can’t afford housing. This is insane.
        Whether or not someone has a credit card debt or spends their money donating to charity, racing cars, or buying lap dances, rather than on shelter, is utterly irrelevant to whether they’re paying for shelter via a mortgage or rent.

        No-one here is being taken in by your irrelevant credit card red herring.

      • Turnitup says:

        The excellent point I was making was that for some who feel ‘just short’ of buying (and for whom it would otherwise makes sense to purchase), it wouldn’t hurt them to eliminate their credit card debt and combine that amount with the amount they’re blowing in rent. No need to feel taken in drsmithy as that isn’t the point. Every man and his dog knows that CC debt is evil. But you can’t afford to see it because you’d have to back away a couple of paces.

      • drsmithy says:

        The excellent point I was making was that for some who feel ‘just short’ of buying (and for whom it would otherwise makes sense to purchase), it wouldn’t hurt them to eliminate their credit card debt and combine that amount with the amount they’re blowing in rent.
        The presence or absence of credit card debt has zero bearing on the calculation of rent vs buy. That’s the simple maths of the situation.

  4. moderate mouse says:

    I know it’s called ‘Plan Melbourne’ but such a blinkered approach is indicative of the flaws in planning across the country. A ‘Plan Victoria’ approach would make much more sense, recognising the role that regional towns and cities could and should play in taking the pressure off unsustainable growth in the Megalopolis of Melbourne.

  5. flawse says:

    “‘densification’ will also be pushed away from the inner and middle suburbs and onto the fringe, where there is less access to employment and amenities.”

    Right there is the real problem in my opinion. So long as our economy is centred around government and the associated FIRE rather than production we will have these sorts of stupid problems associated with deeply centrified employment.
    I suspect that as long as we run non-productive economies we are going to have these sorts of planning problems. Essentially we are planning in a bubble. If you apply pressure in one place you’ll get a bulger somewhere else.

    While I really respect the views of others like UE and Phil re town planning stuff I suspect we are really barking up the wrong tree.
    We’ll do no good until we fix the structure of the economy.

    • PhilBest says:

      Actually, employment is quite dispersed in all Australian cities. There is certainly still more centralisation than a completely free market would cause, but centralisation of employment is still usually 20% or less.

      It is still a fact that unnaturally high density nearer the fringes causes higher commute distances simply because even the dispersed employment is biased somewhat towards the centre.

      “Free to grow” US cities, by contrast, tend to grow “organically” – while housing development “splatters” beyond the fringe, so does employment, and the filling in of the space around the splatter is usually with optimally efficient uses of the land according to what has already been built in the area.

      This is a powerful force for balance between housing, jobs and other amenities.

      In contrast, cities that are planned to grow incrementally in a dense carpet form, are doomed to inefficient co-locations and infrastructure shortfalls being set in concrete for decades, or only remedied at very high cost.

  6. Bluebird says:

    Shouldn’t Labor have addressed this? You’d expect it from the Libs, ie just chuck em out west with the bogans.

    The “left” needs to be destroyed and rebuilt.

  7. hamish says:

    Boroondara sounds like a perfect example of NIMBY local govt preventing increased density in exactly the sort of areas it should be happening. For a greenbelt policy to even have a hope of working, these sorts of local planning rules need to be forcefully overidden by state govt… but state govts don’t have the political balls to do this.

    Leith, as an aside, I’ve posted this link before, not sure if you saw it: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=837244 Given the main cited reason for greenbelts, urban consolidation etc, is a fear of unbridled American style suburban sprawl, this paper suggests that the reason cities like Houston are so spread out, is due to the effects of their planning controls forcing huge minimum block sizes, excessive offstreet parking, wider than needed streets, and so on. So removal of growth boundaries, as evidenced by Germany, needn’t result in vast sprawling cities.

  8. you gee bee says:

    Most of Wallan is within the UGB, I can understand why, it has freeway access, great infrastructure and it is 40min by train to the CBD, there is also going to be plenty of employment soon, with lots of projects on the cards such as the massive Beveridge freight terminal.