Housing BANANAs attack the leapfrog

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By Leith van Onselen

Housing BANANAs (“Build Absolutely Nothing Anywhere Near Anything”) – that curious breed of activists that simultaneously opposes “evil sprawl” and high-rise development, while expecting the growing population to somehow be accommodated by the pre-existing housing stock – have attacked a new $650 million, 1,800 home development in Mount Barker – an exurban settlement 33 kilometres up the South Eastern Freeway from Adelaide.

According to the Adelaide Advertiser, readers have come out in force to decry the development, inundating both the newspaper and the Advertiser’s Facebook site with opposition to the development:

Dozens of readers have posted comments below or on The Advertiser Facebook site, to voice their concerns.

Many said public transport would have to be changed to support the ensuing population explosion…

The push for larger developments in the area has divided the community and a group of residents last month unsuccessfully demanded that Premier Jay Weatherill launch a royal commission into planning processes…

“There’ll be typical townhouse allotments starting about 6m wide and 30m deep and there will also be a mix of villa, courtyard and premium courtyard allotments, ranging from 600sq m up to 900sq m”…

“We’re hoping that the entry-level price for a house and land package would be around the $250,000 to the $260,000 mark”…

The irony with Mount Barker is that it has been developed in response to Adelaide’s restrictive planning system, and represents a classic example of “leapfrog development”, or what I like to call “planner sprawl”.

In 2002, the South Australian Government implemented an urban growth boundary (UGB) around Adelaide, which prevented expansion beyond the metropolitan urban limit. As so often happens with growth constraints, the imposition of the UGB generated pressure to accommodate development elsewhere, with the exurban town of Mount Barker an obvious destination (see below map of Mount Barker in relation to Adelaide).

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A 2005 paper from Policy Exchange explains this dynamic in greater detail:

In the words of Kieron Barnes, senior planning officer at Adelaide Hills council, “The South Australia Labor government created an urban growth boundary around Adelaide three years ago [2002] with the intention to stop the sprawl and to consolidate the city. But you could have guessed what happened then: People decided to move behind the growth boundary to places like Mt Barker from which they then commute to work in Adelaide. I was actually lucky to have bought my house there just before the growth boundary was put in place because after it was introduced land prices in Mt Barker soared.”

How did the state planners respond? “Well, now they have created more growth boundaries around the smaller cities as well to stop this kind of leapfrogging.”

Talking about his own personal house preference, he admits that he likes having a large house and does not mind commuting to work by car. Asked whether that was not actually contradicting planners’ beliefs in consolidation and promoting public transport, he smiles: “It’s difficult for planners not to behave hypocritically when it comes to personal choices. Many I know live in big houses on large parcels of land with two cars that are not necessarily environmentally or economically efficient.”

Of course, we should not be surprised by this outcome: similar phenomenon have occurred in other Australian cities.

The higher land prices arising from the imposition of an UGB tends to force many lower income households to ‘leapfrog’ the boundary and settle in far flung locations where housing is less unaffordable. In the process, UGBs can actually exacerbate urban sprawl and increase car reliance and energy usage, with particularly detrimental distributional impacts on lower socio-economic groups.

It’s yet another example of the perverse outcomes from urban growth constraints, which often have the opposite effect, thus eliminating many of their purported benefits (in addition to worsening housing affordability).

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.