Rethinking urban planning

This blog has dedicated significant effort questioning the axioms underpinning Australia’s urban planning system. This system has grown increasingly restrictive as urban growth boundaries (UGBs), minimum targets for ‘brownfield’ development (urban consolidation), up-front infrastructure charges, amongst other measures, have been implemented across jurisdictions since the late 1990s/early 2000s.

These urban planning tools, affectionately known amongst planners as “Smart Growth”, have been adapted from growth management policies implemented in Britain following passage of the Town and Country Planning Act 1947, as well as across a number of other jurisdictions since the 1960s.

The rationale behind Smart Growth is the concern that excessive suburban sprawl is increasing humanity’s ecological footprint and greenhouse gas emissions, as well as requiring expensive new infrastructure to be built in these new developments. By restricting urban growth, it is claimed that these ‘costs’ can be reduced via less car dependence and energy usage, as well as more efficient (intensive) use of resources.

However, in addition to the pernicious effects that urban consolidation policies have on housing affordability (via dramatic increases in the cost of land) and their facilitation of boom/bust house price cycles, many of the policies implemented by planners to restrict growth and reduce urban sprawl tend to have the opposite effect, thus eliminating many of the purported benefits of Smart Growth.

Perverse outcomes occur principally because measures aimed at excluding growth from one jurisdiction – whether via UGBs, greenbelts, or slow land release (restrictive zoning) – naturally generates pressure to accommodate it elsewhere, and exurban, underdeveloped jurisdictions beyond the metropolitan limits tend to be more inviting.

Take, for example, UGBs, which seek to channel new development into built-up areas and exclude it from undeveloped ones. In practice, the imposition of UGBs causes many lower income households to ‘leapfrog’ the boundary and settle in far flung exurban towns where housing is more affordable. UGBs, therefore, can act to exacerbate urban sprawl and increase car reliance and energy usage, which has detrimental distributional impacts in particular on lower socio-economic groups.

It is no coincidence that some of the fastest growing areas in Victoria (Australia) are towns located outside of Melbourne’s UGB – including Bacchus Marsh, Wallan, Gisborne, Drouin and Warragul – which are increasingly serving as commuter towns for households priced-out of Melbourne’s housing market (see here for details). Similar phenomenon have been experienced in other jurisdictions that have implemented Smart Growth policies, including: Seoul (South Korea); Boulder (Colorado); San Francisco (California); Portland (Oregon); Curitiba (Brazil); and Auckland (New Zealand).

A related unintended consequence of Smart Growth is that  ‘densification’ has often ceased to occur at its historically natural locations nearer the urban core, and that ‘densification’ has instead shifted further away into less efficient locations (i.e. far away from employment and ammenities). The reason for this is that the price of land is forced up so much by the growth constraint that households are unable to afford the ‘premium’ price commanded by more efficient locations, and are forced to locate instead at ‘less unaffordable’ but also less efficient locations.

Finally, there is the planner’s false assumption that most people commute into a central area for work, thus supporting the view that urban consolidation will reduce car usuage and travel distances, all the while increasing the viability of public transport. However, this monocentric view of cities is incorrect. Most modern cities are decentralised with only a small percentage of the population working in the central business district. Moreover, the majority of car trips are not from the suburbs into the core, but rather laterally, thereby making public transport unviable for most people (since public transport tends to be radial in nature).

The bottom line is that Smart Growth urban consolidation policies, while often well-intentioned, are failing to meet their purported goals. At the same time, they are contributing to unaffordable housing and boom/bust housing cycles since the artificial constraints on land/housing supply causes increases (decreases) in demand to manifest into rising (falling) prices, rather than to dissipate through changes in the level of new home construction.

This brings me to the purpose of tonight’s post: to share with readers a thought-provoking article written by Wendell Cox, co-author of the Annual Demographia Housing Affordability Surveys, in New Geography.

This article, entitled The costs smart growth revisited: a 40-year perspective, provides a fascinating critique of the consequences of restrictive urban planning practices in the United States, and provides key insights and lessons for Australia as our governments embark on similar urban containment policies.

One thing to note at the outset is that the United States housing markets are unique. Unlike Australia, which has applied urban containment policies more or less universally across the country, such policies have only been applied to around half of the housing markets (as measured by population) in the United States (see here for more details).

Moreover, the intensity and form of regulations varies between states. For example, California and Hawaii – which have had Smart Growth policies in place for the longest period of time (i.e. since the late 1960s) – have less affordable housing and have experienced more pervasive housing bubbles than the later adopters of Smart Growth; although virtually all jurisdictions with Smarth Growth have experienced worse outcomes than those without such supply constraints.

Without further ado, here is Wendell Cox’s New Geography article re-produced below for your reading pleasure. As always, comments are welcome.


The costs of Smart Growth revisited: a 40-year perspective

by Wendell Cox 07/08/2011

“Soaring” land and house prices “certainly represent the biggest single failure” of smart growth, which has contributed to an increase in prices that is unprecedented in history. This  finding could well have been from our new The Housing Crash and Smart Growth, but this observation was made by one of the world’s leading urbanologists, Sir Peter Hall, in a classic work 40 years ago. Hall led an evaluation of the effects of the British Town and Country Planning Act of 1947 (The Containment of Urban England) between 1966 and 1971. The principal purpose of the Act had been urban containment, using the land rationing strategies of today’s smart growth, such as urban growth boundaries and comprehensive plans that forbid development on large swaths of land that would otherwise be developable.

The Economics of Urban Containment (Smart Growth): The findings of Hall and his colleagues were echoed later by a Labour Government report in the mid-2000s which showed housing affordability had suffered under this planning regime. Author Kate Barker was a member of the Monetary Policy Committee of the Bank of England, which like America’s Federal Reserve Board, is in charge of monetary policy. Among other things, the Barker Reports on housing and land use found that urban containment had driven the price of land with “planning permission” to many multiples (per acre) above that of comparable land where planning was prohibited. Under normal circumstances comparable land would have similar value.

Whether coming from the left or right, economists have demonstrated that prices tend to rise when supply is restricted, all things being equal.  Certainly there can be no other reason for the price differentials virtually across the street that occur in smart growth areas. Dr. Arthur Grimes, Chairman of the Board of New Zealand’s central bank (the Reserve Bank of New Zealand), found the differential on either side of Auckland’s urban growth boundary at 10 times, while we found an 11 times difference in Portland across the urban growth boundary.

House Prices in America: The Historical Norm: Since World War II, median house prices in US metropolitan areas have generally been between 2.0 and 3.0 times median household incomes (a measure called the Median Multiple). This included California until 1970 (Figure 1). After that, housing became unaffordable in California, averaging nearly 1.5 times that of the rest of the nation during the 1980s and 1990s (adjusted for incomes). Even after the huge price declines from the peak of the bubble, house prices remain artificially high in Los Angeles, San Francisco, San Diego and San Jose, with median multiples of six or higher.

William Fischel of Dartmouth University examined a variety of justifications for the disproportionate rise of California housing prices and dismissed all but more restrictive land use regulation. He noted that “growth controls (restrictive land use regulations) have the undesirable effect of raising housing prices.” Throughout the rest of the nation, more restrictive land use regulations have been present in every market where house prices rose substantially above the historic Median Multiple norm, even during the housing bubble. No market without smart growth has ever reached these heights.

Setting Up for the Fall: Excessive Cost Increases in Smart Growth Markets: The Housing Crash and Smart Growth, published by the National Center for Policy Analysis, examined the causes of house price increase during the housing bubble. The analysis included all metropolitan areas with more than 1,000,000 population. It focused on 11 metropolitan areas in which the greatest cost increases occurred (the “ground zero” markets), comparing them to cost increases in the 22 metropolitan areas with less restrictive land use regulation (Note 1).

  • Less Restrictively Regulated Markets: In the less restrictively regulated markets, the value of the housing stock rose approximately $560 billion, or 28 percent from 2000 to the peak of the bubble (Note 2). In nearly all of these markets, the Median Multiple remained within the historical range of 2.0 to 3.0 and none approached the high Median Multiples that occurred in the “ground zero” markets.
  • Ground Zero Markets The value of the housing stock rose $2.9 trillion from 2000 to the peak of the bubble in the “ground zero” markets, all of which have significant land use restrictions (Note 3). The 112 percent increase in the “ground zero” markets was four times that of the less restrictively regulated markets. The Median Multiple rose to unprecedented levels in each of the “ground zero” markets, peaking at from 5.0 to more than 11.0, four times the historic norm.

The 28 percent increase in relative house value that occurred in the less restrictively regulated markets (those without smart growth) is attributed to the influence of loosened lending standards. The excess above 28 percent, which amounts to $2.2 in the “ground zero” markets is attributed to to the supply restricting strategies of smart growth (Figure 2).

The Fall: Smart Growth Losses

The largest house price drops occurred in the markets that had experienced the greatest cost escalation, both because prices were artificially higher but also because prices in smart growth markets are more volatile. The “ground zero” markets, with only 28 percent of the owner occupied housing stock, accounted for 73 percent of the pre-crash losses ($1.8 trillion). Thus, much of the cause of the housing crash, which most analysts date from the Lehman Brothers bankruptcy (September 15, 2008), can be attributed to these 11 metropolitan areas.

By contrast, the 22 less restrictively regulated markets accounted for only six percent ($0.16 trillion) of the pre-crash losses. These 22 markets represented 35 percent of the owned housing stock (Figure 3).

If the losses in the ground zero markets had been limited to the rate in the less restrictively regulated markets (the estimated impact of cheap credit), losses would have been $1.6 trillion less (Note 4). The Great Recession might not have been so “Great.”

Economic Denial and Acknowledgement: In his writing forty years ago, Dr. Hall noted that English planners denied the connection between the unprecedented house price increases and urban containment. This same denial also informs smart growth advocates today. This is perhaps to be expected, because, as Hall noted 40 years ago, an understanding of the longer term consequences would have undermined support for these policies.

To their credit, some advocates recognize that smart growth raises house prices. The Costs of Sprawl – 2000¸ a volume largely sympathetic to smart growth, also indicates that urban containment strategies can raise housing prices. The only question is how much smart growth raises house prices. The presence of urban containment policy is the distinguishing characteristic of metropolitan markets where prices have escalated well beyond the historic norm.

The Social Costs of Smart Growth: Moreover, the social impacts of smart growth are by no means equitable. Peter Hall says that the “less affluent house-owner … has paid the greatest price for (urban) containment” (Note 5). He continues: “there can be little doubt about the identity of the group that has got the poorest bargain. It is the really depressed class in the housing market: the poorer members of the privately-rented housing sector.” Finally, Hall laments as well the impact of these policies on the “ideal of a property owning democracy.”

Hall’s four decades old concern strikes a chord on this side of the Atlantic. Just last week, a New York Times/CBS News poll found that nine out of ten respondents associated home property ownership with the American Dream. Planning needs to facilitate people’s preferences, not get in their way.


Note 1: The housing stock value uses a 2000 base, which adjusts house prices based upon the change in household incomes to the peak.

Note 2: The underlying demand for housing was substantial in some of the less restrictively markets, which is illustrated by the strong net domestic migration to metropolitan areas such as Atlanta, Austin, Dallas – Fort Worth, Houston, Raleigh and San Antonio. At the same time, some more restrictive markets (smart growth) that hit historically experienced strong demand were experiencing huge domestic outmigration, indicating little in underlying demand. This includes Los Angeles, San Francisco, San Diego and San Jose. Demand, however is driven upward in more restrictively metropolitan areas by speculation which, according to the Federal Reserve Bank of Dallas is attracted by supply constraints.

Note 3: The 11 “ground zero” metropolitan markets were Los Angeles, San Francisco, San Diego, San Jose, Sacramento, Riverside-San Bernardino, Las Vegas, Phoenix, Tampa-St. Petersburg, Miami and the Washington, DC area.

Note 4: The pre-crash losses in the 18 other restrictively regulated markets were $0.5 trillion. These markets accounted for 37 percent of owner occupied housing in the metropolitan areas of more than 1,000,000 population, compared to 35 percent in the less restrictively regulated markets, yet had losses three times as high.

Note 5: The Containment of Urban England also indicates that new house sizes have been forced downward by the planning regulations (see photo at the top of the article).

Photograph: New, smaller exurban housing in the London area (by author)

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life

Unconventional Economist
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  1. Leith – many thanks for reproducing this excellent article from New Geography by Wendell Cox.

    It deserves to be widely distributed and thoroughly discussed.

    Readers may also wish to read the excellent comments to this article on New Geography as well.

    In commenting on Wendells article on NG, I note –

    (a) How too many economists “put the cart before the horse” regarding the cause of the Global Financial Crisis. Smart Growth caused it – not finance.

    (b) Corrected Dr Arthur Grimes comnfusion over Urban Echo Values and True Market Values. It will be a great day indeed when economists are taught structural urban economics.

    (c) Outlined how Smart Growth policies have likely created $NZ17 billion of damage with the Christchurch earthquakes, when it should have been less than about $NZ8 billion.

    It is really a complete joke Australia with its small population of 22 million and roughly the same land area as the United States, has idiotic Smart Growth policies in place.

    Just 0.13% of Australia’s land area is urbanised – 0.70% of New Zealand’s.

    The only ones to benifit really are the Banks, by conning people (with the political and commercial elites) in to becoming “Mortgage Slaves”.

    The simple reality is that households should not have to spend any more than the equivilent of 3 times annual income to house themselves, with mortgages of 2.5 times.

    Why the public tolerates politicians forcing them to make unnecessary donations to Banks is a mystery indeed.

    Hugh Pavletich
    New Zealand

    • Ignorance is not a mystery.

      Ignorance is not bliss. It is the food of slaves, and the tyrant’s money. Uknown.

    • Only last night had another “talking to” by my parents to buy a house. My father seemed fine with me having to commit 50% of my take home pay to a mortgage. And even when I told them the most I could borrow on my single income salary is 200K and there is no longer any housing at that price they just stared at me blankly and said “Rent Money Is Dead Money”. Land of the Body Snatchers it seems

      • feed the banks

        True that Ron. I am still seeing people at work bedazzled by how much their home is worth believing that the price surge of the last decade is unstoppable. To think otherwise is a big ask perhaps.
        Unfortunately we have a MSM who sets the agenda, and the agenda has nothing to do with affordable housing. The agenda is high prices so that:
        1. banks can siphon off large amounts of interest and swoop on those who fall under the Foreclosure Bus.
        2. Govt take their cut in stamp duty, land tax, GST events etc, so the higher the house price the better.
        Tax system is designed to encourage gambling. Speculators, pretending to be investors, can go into hyperdebt thanks to the ability to buy 2nd hand property with Interest Only Loans. Negative gearing, the other debt accelerant, has distorted the housing market. In Aus it is possible that any one property will never turn a rental yield profit as there is no time limit to negative gearing. A 200 year old home can be negative geared. Go figure.
        Interest chasing banks are happy to treat borrowers like debt slaves.
        The Reserve Bank, tasked with keeping an eye on credit levels fell asleep (or pretended to) for a decade and now housing debt to housing assets is at a ratio of 28:1 up from a ratio of 10:1 in 1982. Debt to asset ratio of 28:1 equates to Loan to Valuation ratio of 96.4% (RBA Stats B2 ).
        Real estate market in Aus is a protected scam at all levels, right in front of our face.

      • Ron – Rent money is a far better deal, than making unnecessary donations to Banks.

        Note further down this thread, how those who waited in Ireland to purchase housing at real market value are the “Irish eyes that are smiling”.

        Paying bubble prices for housing is best described as unnecessary “mortgage slavery”!

        The money is always made in the buying of real estate.

  2. Leith,

    An interesting posting.

    Can you give us a simple summary (2-3 paragraphs) on how you believe urban planning in Australian should be implemented and use one of the Oz capital cities as a case study to show how your proposed approach would have changed urban expansion over the past 10-15 years.

  3. @ Hugh. I actually laughed when you said that the UGB caused a high damage bill as a result of the Christchurch Earthquake. Of course it did, however what would have happened if the quake was located outside the existing UGB and there was no UGB, there would have been no/very little damage. These disasters are likely to occur across the world outside of the boundaries of cities that we have little idea of.

    A have a few points to make about the article:

    …….”Finally, there is the planner’s false assumption that most people commute into a central area for work, thus supporting the view that urban consolidation will reduce car usuage and travel distances, all the while increasing the viability of public transport. However, this monocentric view of cities is incorrect. Most modern cities are decentralised with only a small percentage of the population working in the central business district. Moreover, the majority of car trips are not from the suburbs into the core, but rather laterally, thereby making public transport unviable for most people (since public transport tends to be radial in nature).”

    I don’t think any planner believes most people work in the CBD, rather that the CBD has the highest concentration of employees. Show me a number of cities in the world where there is a precinct that has more employees than the central employment precinct?
    Also, those in higher density areas do catch public transport more often as the higher the density, the greater variety of locations that can be made available due to the greater number of people available to go to these locations. Why is PT better in the inner 5km of most cities than outside? It is due to residential or employment densities. The cost recovery AND frequency of buses on high density corridors are substantially higher than that of low density corridors. A classic case study is that of the Arlington Corridor in the Washington Metro area. Walk up to the stations has increased to 75% of the number of people using the Metro system. Car ownership has reduced with 17.9% of people living within the corridor owning 0 cars and less than 25% have 2 or more. The national average is 10% living with 0 cars and 55% with 2 cars. This is a substantial drop in the cost of living. The mode share to work along the corridor is large with 39.3% use transit, 10.5% walk or cycle with 2.3% work from home. The national average for transit use is 4.7% and the remainder of Fairfax County is 7.3%. The result was 27 million square feet of development with 30,000 housing units with traffic numbers actually going down.
    There is also a major issue with available farm land. We have developed our cities in the most fertile areas of Australia. We are not overloaded with good quality agricultural land and we need this protected for future generations. The current argument seems focused entirely on the cost of purchasing a roof over your head while ignoring most other costs.
    It also seems that you are trying to say the UGB is a major cause of housing affordability. What about access to credit, government policies such as FHG etc. IMO these have a much greater impact on property prices.

    • KJUP


      I spelt out the extensive reasons why the costs for these events are likely to be twice what they should be, because of Smart Growth policies within a recent article 20 June.

      You can access it via the archives on the interest co nz website, or by simply popping in to Google Search “Christchurch earthquake Hugh Pavletich”.

      Smart Growth while much in favour here in Christchurch, particularly by the political and commercial elites (driven by the Council bureaucracy), prior to the 4 September event, is history here now.

      People are increaingly recognising the futility and excessive costs of it.

      My sense is that the visible costs of Smart Growth to Christchurch will be in the order of $8 – $10 billion. And thats not even touching the massice disruption costs, which will be well in excess of the above visible costs estimates.

      Bear in mind Christchurch was a 6 Multiple city prior to the September event. With population loss and land being opened up rapidly on the fringes as well, Christchurch will rather quickly start tracking back towards becoming close to a 3 Multiple city.

      There is about $28 billion of bubble residential value in the city at the 6 Multiple, with by my estinates about $8 of bubble mortgage debt underpinning it.

      And the disruption costs dont end there of course.

      The major lesson though, is that cities cannot recover until Smart Growth is done away with and affordable fringe land is bought on stream. In the first eight months (September through April) we only had 21 earthquake related residential consents.

      The real disaster of Christchurch has been Smart Growth – more than the earthquakes themselves.

      The days of bureaucratically driven playtime urban governance and planning are over in New Zealand, I assure you.

      Hugh Pavletich

      • Hugh,

        From what I can tell, you seem to have an issue with the management of the UGB and the bureaucracy issues with the council.

        I agree that land should have been made available immediately to service new areas that are not as prone to Earthquakes. This has happened in SEQ where Grantham has been essentially relocated away from the Jan 2011 flood level. From what I understand, land that was outside the UGB has been allowed to be redeveloped to ensure there is no issues in allowing housing to be developed in flood free areas. Before this time there was no demand to move out of the valley.

        Why is it always residential land that we focus on? Why can’t we build a foundry wherever we want, or an airport? In SEQ the areas outside of the UGB are actually designated for a use also, for farming or for ecology. If these areas were not zoned, they would always become the ‘lowest and not best use’ and we would end up with massive cities with no reserves and no food.

        Should we open up national parks for housing? Or the Great Barrier Reef for oil exploration?

        • KJUP

          It would be easy for me to laugh at your comments above regarding urban areas expanding in to “scarce” farmland, national parks….etc.

          Sadly – thats an instinctive response of too many planners and others. People in the main, who have difficulty coping with the stresses of progress. Change and growth by their very nature are difficult to handle for some people. Particularly those in the protected environment of government employment.

          I suggest you actually do some simple arithmetic on how much land would be required for normal urban growth in Australia, based on current and projected urban densities. Bearing in mind of course, that as we become more affluent, the larger houses and lots we will require.

          International Urban Density Estimate information is available on the Demographia website to assist you.

          I would be most surprised if Australia’s urban areas could expand from the current 0.13% of its total land area to about 0.25% over the next 50 years.

          In New Zealands case, it would be impossible for us to expand from the current 0.70% to 1.2%.

          Urban areas for the USA are about 2.7%, Ireland 4% and the United Kingdom 9% as I recall.

          I refer to these issues within the interest co nz article I mentioned above – where you will find further helpful hyperlinked material as well.

          Hugh Pavletich

          • It is useless talking of urban area as a percentage of total. Once you’ve got figures detailing urban area as a percentage of arable land not total land (weighted for the productiveness of that arable land). Not a huge amount of land in Australia is particularly useful for anything.

        • KJUP;

          The US cities with low, stable land prices, have abundant “green space” in them – parks, heritage areas, large grounds for schools, etc. As long as there is no hindrance to development around and beyond the green enclaves, there is no inflationary effect on land prices.

          The obvious for a city like Christchurch, is to leave the least stable land in green space, and develop around and beyond it. Developing monolithically within a strict boundary forces land prices up and creates pressures to waive normal safety considerations for areas of land that are “in the right place for maintaining the city’s compact urban form”.

          There is an absurd perception among the public, that allowing urban sprawl will result in NZ/Australia/the world being “paved over”. This, in the day and age when people can actually see for themselves on Google Earth, just how little “urbanised” the planet actually is – let alone NZ and Australia.

          Believe it or not, there are Japanese academics who argue that urban growth restraints were responsible for Japan’s serious property bubble in the late 1980’s – the fact that even Japan might “pave itself over” does not seem to bother them. Japan has to import food anyway. Having to import another 5% or so because they allowed urban areas to grow from around 12% of their land mass to say 15%, so what?

          In the case of Aus and NZ, we export massive surpluses of primary produce for which terms of trade have trended against us for decades. The product of urban economies is where all the wealth increase has occurred in the world for the last 60 years. Yet we “preserve” land for the “declining” terms of trade sector, and penalise industry (and workforces) in the sector in which terms of trade have improved. This is nuts.

          • >just how little “urbanised” the planet actually is – let alone NZ and Australia.

            so since the jobs are in the CBD and telecommuting is impossible you suggest we drive from Toowoomba into the Brisbane CBD into increasingly funneled dense traffic?

            Or are you proposing something else?

            Have a look at Tokyo if you want an example of effective high density living.

        • I find myself unable to reply to your reply below … the point about figures as absolute gross land mass vs population are indeed useless and gloss over the reality of where the farming land is / was … that is near to the urban centers. Why are the urban centers there? Because the food was once there …

          still, its interesting to read how economists think about this topic. I view economy as being the study of thrift and increased cost benefit – sadly all too often it becomes the realm of charts without axis labels and theory which verges on social science.

  4. You cannot isolate urban planning and problems within our cities from the structure of the economy. The thread on the Sustainability of the service economy needs to be combined with the urban planning thread, or, at least, read at the same time.
    Clearly the structure of the ‘service’ economy we have created is unsustainable. The ‘service’ economy centres around Govt, it’s hangerss-on, lawyers, accountants etc who congregate in the innner cities and ‘create’ all this so-called employment in the centre of cities.
    If we had a more sustainable economy, with less ‘service’ activity and more real production employment would be much more diverse, not only economically, but also geographically.
    The whole society would be more sane with bigger self-sustaining satellite cities and towns and much less need for transport and the attending infrastructure.

    • I agree that none of elements that caused bubble cycle should not be considered isolated. These housing bubbles were caused by Joint “Criminal” Enterprise that involved urban planers, central bankers, commercial bankers and corrupt politicians.

    • I really like the way you put it. By the way, urban economies “free market” TREND IS towards exactly what you are saying.

      Cities start (eg our cities 100 years ago) as agglomerations of every kind of activity. As they grow and economies develop and urban land prices rise (as rising incomes capitalise into land prices), industries and their workforces start to “sort” into dispersed areas depending on their land intensivity and ability to pay for land.

      Urban planners trying to halt this trend in the name of “sustainable” public transport (especially inflexible rail systems) are in fact simply killing off the industries least able to pay their way under a paradigm of higher urban land costs for everyone. Ironically, some of the first to disappear are “recyclers” of furniture etc.

      I call this the “Second Life” fallacy of urban planning. In the “Second Life” online game, no-one is a factory worker or a warehouse person.

  5. and instead of creating decentralized cities that will effectively reduce commuting time and oil consumption, our government is expanding Sydney CBD.

    This is an additional argument to transform Barangaroo in a park and instead
    build new commercial center (CBD) somewhere else (on the south, for example)

  6. It’s worse than that,

    Over the past 20 years, town planners in Ireland (One of the lowest population densities in Europe) were sent to the UK for indoctrination.

    So all the social engineering nonsense about ‘high density’, ‘sustainable’ chicken coops was imported lock stock and barrel.

    Villages in the middle of nowhere ended up with cheek by jowl future sink estates and 4-5 story apartment blocks which none of the locals would touch with a bargepole. The builders of these, did a roaring trade for a while, renting to the 300k odd eastern Europeans who came a calling.

    The locals OTOH, did what they always done and called in favours from the local parish pump to bypass the interference of the planners, getting permits to build one off housing miles from nowhere.

    The above is a selection of property on sale from near where I grew up. The asking prices are half of what they were 3 years ago.

    A good wage locally is 25-30k Euros. Irish banks are dead and every mortgage application requires 20% down and will advance no more than 2.5-2.75 times income. (unlike the 10-15 times income prior to the bust)

    More tales of historic property fallage here


      • Greg – I very much appreciate you drawing our attention to the sorry case of Ireland, where the sorely needed “public conversation” of these important issues, has yet to get underway.

        I do hope the Managing Editor of Finfacts Michael Hennigan gets on to this. He is well aware of the planning driver of the Irish housing bubble.

        The Irish economists “hang out” at the website The Irish Economy , but sadly, they are no where near as advanced as the economists here in New Zealand and Australia, who now generally recognise the “planning driver” or “trigger” of these unnecessary housing bubbles.

        I gave the economists a good serve over a couple of years ago with “Housing Bubbles & Market Sense” – available via the Highlighted Articles Section on my website .

        The sooner economists are taught Structural Urban Economics as part of their training – the better. It sure would help if they started to talk the same language development / market practitioners do.

        Hugh Pavletich

        • Hi Hugh,

          Michael Hennigan has been shining a light on this for years, but we’re talking about Sicily in the North Atlantic here. The state has been endemically corrupt in the body politic since it’s foundation.

          Imagine a western european country where the ex Treasurer and then PM swore on oath that he didn’t have a personal bank account in the 1980s….

          Growing up there at that time, it wasn’t that backward I can assure you.

          Some economists over there do get it, and get it in spades. Thinking Constantin Gurdgiev and Morgan Kelly specifically.

          But there’s a slavish devotion to group think which precludes any attempts at sorting problems before they get out of hand.

          The same PM above came out with this wonderful quote in 2007 when Kelly pointed out that the emperor was stark b*llock naked…

          “Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don’t know how people who engage in that don’t commit suicide because frankly the only thing that motivates me is being able to actively change something”


      • Yeah, that observation from Ireland is extremely confirming of the case that is taking shape against the role of restrictive planning in economic disaster.

  7. I’m with Leith , I’d like to see an alternate plan for aussies.

    It appears we have invested too much in a handful of capital cities while our exurban towns and regional centres are left with the scraps. For example Wollongong & Newcastle don’t have decent airports. We need more cities, not bigger cities. State governments are struggling to cope with the responsibility of pumping up a capital city and then trying to govern the remaining 99% of the state on scraps. Local councils are becoming massive, corrupt & going bankrupt trying to cover the gap. The racism & infrastructure issues in west Sydney could have been avoided if we had encouraged development in regional cities instead.

    I think it’s time to consider more states. Our states were based on populations over a century ago, they’re not relevant today. More states = more capital cities, smaller local councils.

    • More states?

      Dear god no. Ditch the states and have larger local councils under a federal Government with a transparent and consistent planning approach. The last thing we need is more bureaucracy.

      • As a very recent incomer, I would disagree.

        I would suggest more states, a lot more states and to remove the direct taxation powers of the Federal Govt completely, undo the Income Tax acts from 1942 and vest direct taxation directly in the localities.

        Speaking as someone who has just come from somewhere with one of the most centralised states in the world (UK), you really don’t want any more power concentrated in Canberra.


        • Joe Blow and Adam Smith – there are two types of local government in this world – the small and the bad.

          Christchurch, NZ is a classic case of this. It had forced amalgamation forced on it back in 1989 – and it has been going downhill ever since.

          I have written various articles on this – in particular, “Christchurch: A bureaucratically buggered city”.

          Christchurch cannot recover until this sorry bureaucratic mess is sorted out and we move to a “One City – Many Communities” model.

          There is a growing and heartening recognition that this must happen – thankfully.

          Hugh Pavletich

      • You two are arguing for the same thing: a small federal government that has limited powers (e.g defence, law and order) and many competitive “States” (with broad powers, i.e trade, taxation, legislation) below that.

        Historically its also the most robust and economically prosperous method of government.

        A centralised, powerful federal government with no layer below that (or “powerless” councils) has historically always failed or stalled a countries progress or economic prowess.

        • I find Prof. Fred Foldvary’s arguments in favour of numerous local governments, very convincing. But currently we have “below federal” level governments acting as the biggest obstructors of progress in our economies.

          In the USA you get Texas rightly taking population and business away from the growth-obstructionist States. But Australia (and NZ) have NO “Texas”. Local governments are ALL infected by the same anti-growth groupthink, and local body politics is infested with “Green” tails wagging the dog, far worse than at the “federal” level.

          I can’t really explain why, other than perhaps the lack of “Texan” style CULTURE (God, guns, freedom). We might sneer at and patronise the unsophisticated redneck Texans, but their political intuitions can be trusted to bring successful economic outcomes, in contrast to sneering “liberal” leftist Nobel Prize winning economists.

  8. Strategic Thinker

    An interesting article Leith. May I declare an interest here. I am an urban planner that works in a State Government planning department in its strategic planning section. I have worked on long term strategic plans, land supply and housing affordability issues, rezoning of fringe land and infill development opportunities.

    While I agree that restrictions on land (or rather housing) supply can impact upon housing prices, I do not subscribe to the view that restricting fringe land supply is the cause of our affordability problem. We generally have sufficient supply of land on the fringe of our cities and housing on the fringe is mostly affordable – I will leave out arguments of affordability from transport costs and infrastructure provision.

    What has not occurred in our cities is the generation of housing (land) supply in the areas where people want to live – i.e. existing areas that are well serviced. This is where the most restrictive planning policies, which inhibit infill development or redevelopment at higher densities, have been implemented – most often by local councils at the request of residents. Arguments about heritage, character and the protection of suburbs from such development have restricted the availability of housing to meet demand – often these arguments are made in tandem with protecting property prices. The consequence is that housing (land) is considered more valuable in the inner suburbs (or other desirable locations) and price is driven too high. This then ripples out through the middle suburbs.

    I once put the question to Wendell Cox that, given this situation and his argument that restrictions on the fringe be relaxed, perhaps planning restrictions should be loosened in existing areas to allow development and the generation of housing supply to meet demand. He didn’t support this view and wasn’t comfortable with the idea as it didn’t align with his argument for further fringe growth. Since then, I have always found Cox’s arguments to be compromised.

      • With respect Cameron, it’s a bit rich to attack Cox’s analysis and views without acknowledging that your views on planning – i.e. that supply constraints have absolutely no impact on price – are biased by your green ideology.

        I must say, having spent the past 8 months studying the literature on housing supply (after being highly skeptical at first), Cox’s views on this matter are far closer to reality than your belief that house prices are set only by demand.

        Don’t get me wrong, I love your work and agree with you on most things. But to continually argue that the supply-side in Australia is not being restricted, particularly when the evidence is staring you in the face, is ridiculous.

        • I always tell myself to just not comment, but I am obviously a little too passionate to let things slide.

          No doubt I have my own biases, but prior to being the economist environmentalist I was in property development – residential, and industrial – mostly conducting feasibility studies for new site acquisitions. I have seen the frustrations of getting approvals from local councils first hand, and the impacts of changes to planning rules and processes on the actions of the development industry.

          I have also been intimately involved in the implementation of infrastructure charges with local councils.

          This background is what has lead to many of my views on the property market and the impacts of planning.

          As I have said repeatedly, zoning controls COULD impact prices if they resulted in a QUANTITY RESTRICTION. But the only evidence I have is that councils approve far more developments than the market can absorb.

          Zoning controls simply control the LOCATION of different types of development – not the quantity. And if you argue that restricting the footprint of cities with greenbelts means people choose to reside beyond the green zone, this should lead to a reduction average prices, since housing in the greenbelt would be superior (and more valuable) to that constructed beyond it.

          I doubt discussing this in the comments of your articles will make either of us suddenly change our tune, but I hope with time we both at least understand in depth the rationale for each others views. Give me time.

          • one of the problems with (so called) discussion is that neither side is actually intending to listen to the arguments of the other for any other purpose than that of rebuttal. Its not like most are wanting to learn or expand their thinking. They already know they’re right

    • Yes – that is the major problem.

      The population of Balmain now is less than 50% of what it was in 1920. According to the leichardt council website.

      It is a similar situation in most of the inner suburbs of sydney.

      It is ludicrous that the most sensible areas for residential development have been turned into vast heritage precincts inhabited by the well to do.

      Surry hills is another example – a natural expansion for sydney cbd and it is becoming yet another history ‘village’ where council officers wander about checking the colour of window frames.

      Perhaps keep the high street scape for village colour but the rest should be open for med high density housing if a developer reckons there is a market for units. If they make a few bad calls the worst that will happen is some more affordable housing close to the city.

      Before all the slum warnings roll in – consider potts point – highest density in australia built on the bones of the colonial mansions of the former sydney jet set. Had those historic piles been preserved kings cross would never have existed.

      • perhaps this ‘heritage’ listing is trying to preserve things … perhaps that’s an admission that they don’t like the increase in population and that change isn’t the “good thing” TM its been sold up as

    • Strategiv Thinker =

      The fringes are the “supply / inflation vent of an urban market. On my website you will find a Definition of an Affordable Market. It really is all just so formulaic. There is no mystery to it all.

      Take particular note of the fringe Development Ratios. These should be 20 / 80 serviced fringe lot / housing construction. They are of critical importance.

      You need to check out within your area, the pricing difference per hectare of Raw Urban Fringe Land and go out say five kilometres to find the True Rural Value per hectare. If there is any significant difference, you will immediately know there is insufficient fringe urban land being supplied.

      “Price” is the only true measure of scarcity or abundance.

      By allowing market priced land on the fringes, this will ripple through the rest of the urban area, making ALL forms of development viable.

      This is why places such as Texas get in way more development of all types than say California – and of much better qality too.

      Some years ago I wrote an article “Housing Bubbles: Jumbo Mortgages = Jumbo Problems”. Just Google Search it. By my calcs, California when adjusted for population has a million less residential units than it should have – in comparison with Texas. This was based on an important Federal Reserve Report released at the time.

      Hugh Pavletich

    • We generally have sufficient supply of land on the fringe of our cities and housing on the fringe is mostly affordable

      With respect Strategic planner, if you believe that $350k+ for a basic home on a small-sized block is “mostly affordable”, you need to have your head read.

      If supply constraints are not an issue, can you please explain to me why fringe block sizes across Australia have been shrinking in size at the same time as prices have doubled over the past decade?

      Can you also explain how much larger cities in Texas and Georgia (e.g. Dallas-Fort Worth, Houston, and Atlanta) are able to supply brand new large homes on quarter acre blocks for only $US160k, which incidentally is less than the cost of a similar sized serviced block (without house)in Australia?

      Finally, as pointed out by Hugh P below, what is the price of rural land outside of Melbourne’s UGB? Why is it priced lower than land located within the UGB?

      Other than that, I agree with your views on urban infill and NIMBYism.

      • Strategic Thinker

        Thanks Leith.

        I think anyone buying a $350K home on a small block on the fringe needs their head read, particularly if doing so in Adelaide where I live (I am a renter and do not aspire to buy anytime soon) and work. You can buy a comfortable 3 bedroom house on 600sqm for less than $200K on the northern fringes of Adelaide – it just won’t be in the nicest street in the nicest suburb.

        For information, the northern Adelaide fringe is really Adelaide’s only major fringe growth area due to geographical constraints to growing further south (McLaren Vale wine region and watershed areas) and east (Adelaide Hills watershed area), though there is some growth planned in the Hills at Mount Barker (despite significant community opposition) and further east in Murray Bridge.

        The State Government is planning for significant expansion of the urban area in the north, with land for more than 150,000 additional dwellings being currently being structure planned and rezoned (there is now some nervousness in the housing industry that we are rezoning too much land!). Adelaide’s peak construction rate is about 10K dwellings a year (based on high population growth from immigration, which has reduced significantly), of which in recent years more than 50% has occurred as redevelopment of existing land, development of underutilised land and apartments, etc. From memory, maybe 25% of development is classed as fringe – maybe less – but in recent times we have had large-scale redevelopment of former Government owned land parcels within existing developed areas.

        It is important to understand the market dynamics of fringe or other broadhectare (not necessarily on the fringe) developments. From my understanding of the Adelaide context, most are not for first homebuyers, although there are a significant number of them. I came across some analysis a little while ago (I forget where, so please forgive me) that suggests that the majority of FHOG recipients buy established homes in existing developed suburbs. Most of the demand for new development areas is from 2nd or 3rd homebuyers trading up – to a bigger house, nicer house, nicer area. Land developers deliberately market to this aspiration and develop estates that have feature lakes, plentiful reserves, etc. This is where land developers get the profit cream – a bit like house builders get theirs through the designer kitchens and bathrooms. Often the buyers of new housing/blocks in new development lived within 5 kilometres of the development – the new estate is generally perceived as being nicer than their existing neighbourhood.

        On the issue of the cost of fringe land versus rural land – this is driven by what a developer is prepared to pay for the fringe land. They do this having regard to the infrastructure costs, potential yields and importantly, what price they believe they can sell blocks for. I believe that if the housing market overall is inflated, the potential price of the future allotments will be inflated and the price paid for the land is therefore inflated. Of course, I mention infrastructure and it wasn’t urban planners that decided government borrowing and debt to finance infrastructure was anathema to good economics, which of course gets factored into land prices on a user pays basis. Ultimately, rural land has a significantly lower value because it cannot be economically serviced with the required infrastructure and has limited development potential.

        As for the reducing block sizes, perhaps developers have adopted the same methods as food manufacturers in setting a price for a certain size food item, then retain the price but reduce the size of the serving! However, on a serious note, I will admit that it was planning that adopted the notion of smaller allotment sizes to preserve land – it really took off in the 1990s (not my fault – I was still in high school) – and perhaps it hasn’t paid off like we thought it might. I did some research on residential density that suggests that despite decreasing the size of blocks, i.e. increasing net density, we have actually increased our consumption of land, i.e. decreased gross density – meaning we use more land to generate the same yield of dwellings (note this wasn’t the basis of my research and needs further detailed analysis). I suspect that much of this has to do with the amount of often underutilised space given over to reserves, car parking, large-scale shopping centres, etc.

        On your comment regarding the price of housing in the US, perhaps the answer lies in the size of the market and the amount of competition. I know from my travels that a can of Coke or a pint of beer costs more in Australia than in the US or Europe. Food is also more expensive here…

        • Thanks for your response. I don’t agree with much of what you have said – particularly the drivers of land price appreciation (it is artificial scarcity caused by regulation)- but I appreciate your comment.

          With respect to Adelaide serviced fringe land prices, I bet you didn’t know that yours are the equal second most expensive in the country on a square metre basis (see here from RP Data) and your block sizes are also the smallest (see here).

  9. The debate should not be about whether med high density is better than quarter acre blocks. Let people choose what they want in a market much less distorted than what we currently have.

    The issue it the total cost of the location.

    If people want to live on a quarter acre in suburbia with only car access let them. If developers reckon there is a market for 2 bedroom units in balmain and they can buy a contigous set of quaint 19th century former slums now tasteful design experiments – good luck too them. Afterall terrace building simply reflected the economics of land back then.

    The miracle of the car and electric train just made suburban blocks an economic practicality for former terrace dwellers.

    By all means protect a few areas as history areas:

    Ye olde federation town

    Ye olde victorian pompous extravagence

    Ye olde red brick flat land

    Ye olde sandstock brick town

    Ye olde AV Jennings world

    Perhaps even a few classic Meriton blocks

    But pretending that everyone is worth keeping or that everyone can afford to live in a ‘village’ within 10km of the CBD is daft.

    If people like a village atmosphere they should go live in one rather than insist on the creation of rich tribal reservations close to the city.

    Afterall Annandale was once good diary land spoilt by 19th century suburbia.

  10. I guess there is a risk you could go to far the other way if their are no limits on growth.

    In places like Detroit where it was cheaper to build on the fringe and let the inner ring rot. Sure there is more than that going on in Detriot but planning has been said to be one of the reasons for their inner city issues.

    There needs to be some artificial price mechanism to encourage consolidation and use of inner city infill land which due to anything from contaminted soils to difficult acces are often expensive to develop v greenfield fringe land, land price and amenity can at times need a helping hand.

    The issue in Australia is they have set the bar way too high.

    The objective of the policy is easy enough to get ones head around – small urban footprint etc, but the application of the policy has been atrocious in Australia and led to our perverse housing market.

  11. I agree with people who want redevelopment at higher densities to NOT be obstructed by NIMBYism everywhere. Pfh007 just above, is right – just protect a few areas but let the rest be redeveloped as the market wishes.

    I am surprised if Wendell Cox advocates freedom of fringe growth but not freedom of infill and redevelopment of existing built up areas. It makes no economic sense to disallow this.

    But what urban planners also need to understand is this. Hugh Pavletich is 100% right that fringe land is the “supply” “vent” for urban land prices. If you drive up the price of urban fringe land through “planning gains” rackets, you drive up the price of all the more favourably located land too. This is simple real estate economics. The price of the more favourably located land becomes the main obstacle to its redevelopment, even if you abolish the laws against dense redevelopments.

    There is NO example of a “Smart Growth” city that has managed to shift the “spatial distribution of density” of its population TOWARDS the CBD – in EVERY case, the shift has been AWAY from the CBD, even when regulations and subsidies have FAVOURED inner suburb redevelopment. Portland is the CLASSIC example. This is because of the “real estate prices” effect.

    In effect, the ENTIRE urban “real estate” market becomes a market of “holdout” sellers whose asking prices are wholly unreasonable given the region’s income levels and GDP.

    All this is paradoxical, and baffling to people who think that higher prices ALWAYS have to be because of demand and economic fundamentals. But in the cities with inflated land prices, high land-price-to income ratios, you have to regard the “asking prices” as adrift of economic fundamentals, and being driven instead by speculative expectations. Instead of inner suburb sites in Portland being low cost, and able to be developed as TOD and experience a mild increase in value; the sites are in fact owned by “holdouts” whose asking price is far too high. This is because ALL the urban property in Portland is overpriced relative to economic fundamentals – ALL real estate sellers are “holdouts” in a certain sense, without even realising it.

    Meanwhile, investigations into “Transit Oriented Development” in Houston, find that, wa-hey..!, they DO actually happen, and raise the value of the land a few percent at those locations. That is because the price of the land to start with, was the typical low, highly affordable level that distinguishes “free land supply” cities. Inflated land price urban economies are at a serious disadvantage in the long term – expect them to decline in performance relative to Texas.

    Several of Alain Bertaud’s papers on Portland point out that the higher priced land nearer the urban centre gets developed and populated LESS than the “less unaffordable” land nearer the fringe. This is completely upside down from the usual theoretic expectations that the higher land prices near the centre are driven by “demand” and pressures of population shifting in to be closer to work. Urban growth boundaries furnish a RICH “study” in the unintended consequences of planning hubris, to go with all the earlier chapters in the book provided by the former USSR.

  12. Strategic Thinker at 12.11PM.

    Besides what I say above about the effect of inflated land prices on the prospects for inner suburb redevelopment, the BIG problem remaining is still, as you hint, “the cost of infrastructure” – mass transit infrastructure. Other infrastructure is not bound by any firm rule regarding “urban sprawl” – it all depends “where the water comes from”, “where the waste has to go to”, etc. Sometimes fringe development infrastructure comes cheaper than inner suburb infrastructure renewal or capacity increase.

    But mass transit is a “Dodo” under conditions of urban employment decentralisation. Urban planning that tries to restrict and redirect growth solely to retain mass transit’s viability, are like the parents of a growing child who put him on growth stunting drugs because they love the romper suits he wears in childhood, and can’t bear to have to provide him with something that suits a later stage of development.

    The “later stage of development” of decentralised-employment cities, requires small, flexible “public transit” units. Owner-driver vans and buses would be ideal. Subsidies should “follow the rider”, and provision of the actual service should be “free market”. This model would BLOW AWAY mass public monopolies on EVERY count you care to name – including resource consumption and CO2 emissions.

    If some of the US cities with freedom of land supply actually did this as well, they would be economically “uncatcheable”.

    • “Besides what I say above about the effect of inflated land prices on the prospects for inner suburb redevelopment, the BIG problem remaining is still, as you hint, “the cost of infrastructure” – mass transit infrastructure. Other infrastructure is not bound by any firm rule regarding “urban sprawl” – it all depends “where the water comes from”, “where the waste has to go to”, etc. Sometimes fringe development infrastructure comes cheaper than inner suburb infrastructure renewal or capacity increase.”

      However, in a city that does not constrain horizontal growth, most of the development would be occuring away from existing infrastructure, just by the nature of the infrastructure usually being only on one side of the city.

      “But mass transit is a “Dodo” under conditions of urban employment decentralisation. Urban planning that tries to restrict and redirect growth solely to retain mass transit’s viability, are like the parents of a growing child who put him on growth stunting drugs because they love the romper suits he wears in childhood, and can’t bear to have to provide him with something that suits a later stage of development. ”

      Mass transit will become more and more sustainable as we move towards peak oil. Your example is also flawed as a UGB does not keep inside the boundary the same, it changes dramatically.

      “If some of the US cities with freedom of land supply actually did this as well, they would be economically “uncatcheable”.”

      And the reason why they don’t do it, is because it doesn’t work.

      “The “later stage of development” of decentralised-employment cities, requires small, flexible “public transit” units. Owner-driver vans and buses would be ideal. Subsidies should “follow the rider”, and provision of the actual service should be “free market”. This model would BLOW AWAY mass public monopolies on EVERY count you care to name – including resource consumption and CO2 emissions. ”

      Fine in theory, however pretty much everywhere that has tried it on any kind of scale, it has failed. It does not blow mass transit away as it does not work. What you are trying to do is find multiple solutions to all of the problems that your ‘perfect city’ comes with.

  13. And yet the principle of “Smart growth” are almost exactly what places like Germany have instituted in their planning schemes. And no bubble.

    • You needs BOTH conditions: shortage of land AND lax lending to develop massive bubble.

      Shortage of land alone can cause only small bubble, exactly like in Germany.

  14. The basic problem with “Smart Growth” is that it is a violation of basic human right to build a shelter.

    I’m really curious why is nobody noticing this.

    I’m also not surprised at all, that all this scam is pushed by left oriented environmentalists – as we know historical communist and fascist regimes didn’t care much about human rights.

  15. A good post – here is what i recently wrote about this matter…on my weekly blog the matusik missive and this article first appeared in the Qld (UDIA) urban developer magazine ….

    I was recently asked to outline my thoughts on how the Queensland urban landscape might look 40 to 50 years from now. Go on, you can laugh. I did too. It’s hard enough to forecast the next 12 months, let alone two generations away, but I’ve given it a go, of sorts, so here it is:

    Firstly, though, it might be best to outline my methodology. In short, this forecast will be based on underlying trends, some understanding of human nature, and importantly, the Australian mindset. My outlook is supported by evidence – what people actually do rather than say – and importantly, not by urban myths or fallacies, despite the frequency and noise with which they have been aired of late. Unfortunately, we don’t have the space or the time here to support every claim or go into massive detail; so this discussion is confined to broad shapes – not nitty-gritty.

    Queensland’s urban future (and that of Australia) can best be summed up in two words – Diverse and Dispersed.

    Let’s deal with the second D – dispersion – first. Our regional centres are likely to become a whole lot bigger and at the expense of the already crowded south-east corner of the state. The move away from the world’s bigger cities is already underway, as evidenced in the recent census in the United States, but also throughout much of Europe. Several Asian and Middle-eastern countries are now also following suite. The annual ABS small-area population data suggests it is already happening here and the 2011 Census, due later this year, I believe, will provide further evidence.

    Within our capital cities themselves, the move downtown will slow – again, it already is doing so – as the cost to live within close proximity to the CBD is just too high compared to the real benefits. The urban myths that perpetuate inner city density over other housing forms – suburban growth worsens carbon emissions and traffic congestion; people are being forced to live far from jobs concentrated in our CBDs and denser development will make it cheaper – are all incorrect; but more significantly, are not being embraced by the wider market.

    Instead of having a single high-density city core, with lower development density radiating outwards, the most likely urban shape in the future will be one of more even distribution of housing density throughout the city; concentrated more, no doubt, around middle-ring transport hubs and new master planned town-centres. Our middle-ring and outer suburbs will have much more compact urban settings.

    Diversity relates to the housing stock itself. The current push towards smaller dwellings has little to do with demographics and the market’s wants, and is more about housing affordability. Moreover, it really has to do with being able to flog cheaper priced stock quickly, often to an unsuspecting audience. There is a demand for tightly sized product, but it is nowhere as near as high, nor is the long-term trend towards such as strong, as the urban boosters advocate.

    Taking a wider view, Australia (and America too) is still in its frontier or “barbaric” stage of its cultural evolution. We walk with wide gaits, worship most things large from roadside bananas to women’s appendages (note the title!), and don’t really like crowded spaces or queues. Go visit any major city in Europe or Asia for that matter and you can spot the Aussie (or Yank) a mile away. We like our space; aren’t really ready to give it up, and are not likely to do so for many decades to come.

    Rather than cling to the idea that density and concentration are best, all those planners, architects and developers out there might do better to focus on what appeals to the vast majority of the population, particularly the middle and working classes. Nurturing smaller, more efficient cities, as well as expansive suburbs and revived small towns, may prove far more practical and beneficial than imposing a manic agenda for relentless centralization.

    For mine, rather a forced density agenda on a largely unwilling population, it makes sense to consider how to make a more dispersed (and diverse) urban future more workable and sustainable.

    • there is notion out there called “dispersed concentration” (or something similar!)
      the notion being that our cities could expand horizontally, but do so in a manner quite different to the conventional historic urban sprawl.
      So, rather than cookie cutter houses sitting on 900 sq. m each, no mixed use, and ugly car dominated environments wiht minimal considerant for the pedestrian, you have master planned ex-urban communities with a community focal point, surrounded by some medium density, then some lower density (mix of semi-detached, and detached on say 500 sq. m sections). You encourage + mandate a strong environmental approach, and you ensure that energy and money is put in to public realm design and execution

    • Hi Michael,
      I think what you are talking about largely resemble one of the main plan Queensland government has in place – Transit Oriented Development. Though one must note that the plan is also under a pretext of restrictive urban sprawl including regional centres. Let’s face it, the population density in Australia is still very low in comparison to other international cities. A thinly spread out communities would in the end break the tight government budget for all essential infrastructures and facilities. Besides, an increase reliance on car would inevitably expose the country’s economy to the hostility of oil price.

  16. Its incredible that no one can think outside of the framework of economics. Housing does not happen in isolation of all the other activities in our cities. If you want economic growth, that is, an increase in private interests, you create an increase in public costs. Someone must pay the public costs.

    Economic growth = bigger city = more PUBLIC infrastructure = more PUBLIC costs on everyone in the city = more tax… or because people don’t want to pay more tax planners suggest that the developer should pay when he/she is constructing the housing.

    Who do you think should pay the public costs? How about a bigger carbon tax?

  17. Its incredible that no one can think outside of the framework of economics. Housing does not happen in isolation of all the other activities in our cities. If you want economic growth, that is, an increase in private interests, you create an increase in public costs. Someone must pay the public costs.

    Economic growth = bigger city = more PUBLIC infrastructure = more PUBLIC costs on everyone in the city = more tax… or because people don’t want to pay more tax planners suggest that the developer should pay when he/she is constructing the housing.

    Who do you think should pay the public costs? How about a bigger carbon tax?

  18. It makes sense to curtail urban sprawl. The solution is to allow more people to settle in rural areas.

    It’s foolish to make people buy 5 acres when they only want one acre. How many retirees are mowing 5 acres? Lots; what a waste.

    Nor should those moving to the country be forced to buy in new subdivisions. Rather, landowners should be allowed to sell off bits of existing blocks (except prime agricultural land) as they used to until about 1990. Bush blocks should automatically have dwelling approval, as they used to before the Nanny State.

    Here are some of my writings on this topic.

    (1) Dwelling Entitlement/Building Permit laws keep people bottled up in the cities
    (2) Big Brother housing laws
    (3) “Little Hitler” building inspectors

    (1) Dwelling Entitlement/Building Permit laws keep people bottled up in the cities

    Peter Myers, June 28, 2011

    I often talk about how congested the cities have become, and sympathy with those seeking to try a rural life.

    They face many hurdles.

    In recent decades the states have made laws for “Protection of Agricultural Land” (PAL), to prevent good farmland being cut up for urban sprawl. Nevertheless, this continues at the fringes of the big cities.

    The NSW Government says, “Setting the minimum area necessary for a building entitlement is a commonly used tool to influence residential land uses in agricultural zones. … Setting a large minimum is a disincentive to life style purchasers”

    (Policy for Protection of Agricultural Land, 2004 31 May 2004. Article was at; is archived at

    So, people moving to the bush are forced to buy more acres than they want. This reduces the number of blocks available, and makes moving to the country more expensive, thus keeping more people bottled up in the cities.

    In many areas where the minimum for a dwelling entitlement is 100 acres, the land is former sheep country, not really much good now that the wool market has declined. Yet even to live in these zones, people are forced to buy 100 acres.

    If we want to lessen the unevenness of our population, we need to cut such bureaucratic red tape.

    In Tasmania, unlike the other states, the PAL legislation defines “agriculture” so as to include forestry.

    As Crown land and State Forests have been converted into National Parks, the logging companies have bought up farmland – former dairy country on the red basalt soil of North-West Tasmania – and put plantations on it, for pulp and woodchips.

    This land is being lost to agriculture – according to the usual definition of that word. But it’s being done under “Protection of Agricultural Land” laws, because they’ve tweaked the definition of agriculture.

    Under Tasmania’s PAL legislation, people buying a bush block no longer have the right to a building permit, because even a bush block is deemed agricultural land. The consequence is that buyers hoping to build and move there are inhibited from buying; sellers are unable to sell except to plantation companies.

    (2) Big Brother housing laws

    Peter Myers, June 28, 2011

    I know a builder who lost his licence merely because his wife divorced him. She got the house. Because he no longer had any assets, the Insurance Company refused to renew his insurance. Without Builders’ Insurance, he lost his licence.

    When I last saw him, in 2004, he was building a house for someone, with that person obtaining an Owner Builders’ licence. These days, lots of “Owner Builders” are merely customers subcontracting out the work to tradesmen.

    The real Owner Builders, those who go bush and do all the work themselves, often using second-hand materials, have been pushed to the wall.

    Council planners now dictate everything you can do on your own block. Try asking whether you can use second-hand windows in your house.

    “Provided it complies with the Building Code of Australia”, they all reply.

    “But in practice,” you persist, “Do you allow it?”.

    You won’t get a straight answer. Pretty soon, you realise that you need a Newspeak dictionary.

    These are the local faces of Big Brother. They insist that these rules are for our own good. The Nanny State claims that it’s looking after us.

    If there’s no right to put a roof over your own head, on your own land, then “Human Rights” has no meaning at all. It’s just a slogan.

    Similarly, if you can’t give birth in a simple, low-tech way, avoiding the hospitals (with their 20% cesarean rate), then you have no Human Rights.

    We fought Communist totalitarianism for 40 years, but did not notice the variant growing up in our own backyard. George Orwell told us to look there, and warned that Big Brother would pose as our benefactor.

    You can’t even use second-hand galvanised iron to build a shed. They want you to build kit buildings – that’s the only kind of shed it’s easy to get approval for. Standardised ugly monstrosities, with none of the character of the shacks and sheds of the past.

    The same Socialist pollies who have introduced these rules, also tell us that they are saving the environment. Meanwhile, houses are being demolished and thrown away at the tip, with hardly any recycling of quite usable materials, merely because of these new “planning” laws about “standards”.

    Safety is another excuse. A few bits of fibro in a house, and they prevent you from salvaging any part of the house, for “occupational health and safety” reasons.

    I’ve heard of couples intending to owner-build, who started by accumulating second-hand doors, windows, timber and other materials, then finding that they can’t be used, and their relationships breaking up over intransigent Planners and Building Inspectors.

    The Australia of Henry Lawson seems far away. In those days, you didn’t need approvals or inspections to build your own house or shed in the bush. In many shires, e.g. in the Bega and Nimbin areas, and in rural Tasmania, you could do this until about 1990.

    It all changed during the 1980s when the Socialists in Sydney and Canberra brought in “Uniform Building Regulations”. The Newcastle Earthquake was the excuse they used to make all the states comply.

    A real estate agent in the Newcastle area told me that extensive underground coal-mining may have contributed to the earthquake damage. It’s the reason why weatherboard houses sell as dear as brick ones in the Newcastle-Cessnock-Maitland area.

    The consequence of the Newcastle Earthquake has been a doubling of the volume of concrete & steel in house foundations across the country. Engineers cover themselves against ligitation, by prescribing unnecessarily big footings. This, even though cement is an energy-intensive product.

    Politicians cry crocodile tears over these disasters, and follow up with draconian laws that impact on us long after they have taken their pensions.

    (3) “Little Hitler” building inspectors

    Letter to the Premier of NSW, Bob Carr; August 2004 – by Peter Myers

    Dear Mr Carr,

    In the mid-1970s, there was a movement “back to the land” among young Australians. They built shacks in the Bush, and had babies at home. I was part of that movement.

    These days, there are nearly no home-births in NSW, and owner-builders live in fear of “little Hitler” building inspectors.

    No home births, because of the insurance and litigation industries.

    The houses that owner-builders built were made of stone, timber-framed, pole-framed, mudbrick, rammed earth, log cabins etc.

    They were much more varied, in size, shape and style, than “normal” houses built by the building industry. Owner-builders built more like artists, from the heart. Their houses were an expression of their own creativity.

    Many built at sites without electricity; all used low-tech, manual methods. They were often poor, and built cheaply, giving each other free labour. Each person who helped was learning on the job, and would be able to use newly-acquired skills for his own projects later.

    About 1979, the NSW Government issued a booklet on Low-Cost Country Home Building, as an easy-to-read and non-bureaucratic guide to owner-builders.

    These days, that has all vanished, thanks to laws brought in to regulate the building industry. Building inspectors apply these laws to owner-builders too, demanding that they know The Building Code of Australia, and threaten to pull their houses down.

    One owner-builder, in the north of NSW, told me that building inspectors are “little Hitlers”. Another, in the south of NSW, told me that you (Mr Carr) do not know what is being done in your name. Now I am telling you.

    I heard of a carpenter – a tradesman – who built a Japanese-style house, of timber, without any nails or bolts. It was held together merely by cleverly-designed timber joints, as per Japanese traditional design. Only a master craftsman could build such a house.

    The building inspector forced him to drill holes and put bolts in it. He did, to comply, but later removed the bolts and filled the holes.

    “Enforced mediocrity” is how Architect Harry Siedler calls the new regime.

    When you see stories about shonky builders, on current-affairs programs on TV, consider whether any of the complaints have been about owner-built homes. I’ve never seen such.

    Owner-builders have no interest in cheating, because they are building for themselves. They aren’t employees, and they’re not mercurial.

    But, thinking like artists, owner-builders should not be regimented like the building “industry”. One cannot regulate creativity without stifling it. Imagine if artists had to produce their works to a defined set of “standards”.

    The Soviet Union fell because it was too top-down. It tried to concentrate all creativity in a few people at the top, and make everyone else fall in with their thinking.

    Please introduce an opt-out clause. Call the dogs off.

    Peter Myers
    381 Goodwood Rd
    Childers Qld 4660
    07 41262296

  19. This ‘debate’ or blogfest illustrates perfectly the fundamental flaw in the original article.

    Everybody demands the private right to be heard but no one accepts the public consequence of this. That is, that you must listen to what is said by others. There is no thread to this just a lot of monologues.

    It is the same with housing. Everyone demands the private rights to build without any restrictions but no one wants to accept the public consequences of this. That you will have no right to speak when your next door neighbour decides to build an unfiltered coal-fired power plant that employs child labour. Clearly an exaggeration to make my point but a completely free market equals no democracy… you cannot object to what others are doing but you are free to do whatever you want.

    If you just want to read articles that support your point of view then please do not read this paper

    • Steven
      There has to be balance.
      At the moment, I think things favour the status quo and vested interests far too much. Obviously zoning is very important to protect against incompatible land uses co-locating. And in my view, stringent planning controls in areas / suburbs of clearly proven heritge quality are totally valid.
      Its just that there are plenty of run of the mill suburban areas – certainly with nice qualities – that could entertain far more flexible and liberal planning provisions.
      In my view, Brisbane City’s planning provisions are pretty good. They are fairly liberal, focussed on “performance and design standards” rather than prescriptive controls.
      There are plenty of suburban areas where more medium density could be achieved. The key is to allow such development whilst ADEQUATELY AND REASONABLY protecting the amenities of neighbours – height, sunlight access, dominance, privacy.
      So I’ve termed a new phrase for people like me who welcome new development in their neighbourhood subject to the necessary checks and balances ‘IMBACs” (In My Backyard Accompanied-by Controls)

  20. Precisely Matt,
    …and it is finding that balance, the right set of controls that is virtually impossible.
    I say that because I have worked in the inner city and in the Western suburbs of Sydney and one community wants less building and more say, the other wants more building and are less interested in having a say.

    The problem is not the system… its the size of the system. The universal application of controls across many communities.

    The only reasonable approach is for each local community to determine the laws that suit them, each to find their own balance between economy and democracy… but this cannot happen in our globalised economy. Have a look at the transition initiatives that started in Totnes, Devon UK… where the people are taking control of their towns. Local money, local agriculture, resilient towns that are suitable to the citizens rather than the state authorities.

    • Steven
      I have not come across a perfect planning system in my 15 years as an urban planner and am sure I never will!
      There will always be winners and losers.
      But in my view Brisbane has come close to an optimal system in the way it balances development rights with reasonable design and privacy concerns.
      The key – in my view- is for planners to present the bigger issues. For example, stringently limiting intensification options in a community may mean residents’ children (or elderly parents) may not be able to live in that community, or that community may struggle to attract the essential social service workers – teachers, nurse etc.

      • Yes you are right Matt.
        “present the bigger issues” is in fact what I have been trying to do in my comments… make the point that there are “public” costs when you build housing. It is not just a free market exercise as Wendell Costs paints it.
        “Soaring” land and house prices “certainly represent the biggest single failure” of smart growth”…. don’t worry about the public costs and that will keep house prices down.

        The free market has failed over and over again and we still have people saying that if we only free up the market things will get better again!

        • Ah the mythical free market. Some love it. Some hate it. But none can actually define it.