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, up-front infrastructure charges, amongst other measures, have been implemented across jurisdictions since the late 1990s/early 2000s.
These urban consolidation planning tools have been adapted from growth management policies first 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 urban consolidation 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 their purported benefits.
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.
A related unintended consequence of urban consolidation is that ‘densification’ has often ceased to occur at its historically natural locations nearer the urban core and has instead shifted further away into less efficient locations (i.e. far away from employment and amenities). 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. Essentially, budgets are squeezed so much by high land prices that households are forced to trade-off both space (smaller homes) and location efficiency (i.e. live further out).
This phenomenon is reflected in dense fringe suburban development, whereby postage stamp sections are crammed into cul-de-sacs in patterns that have been mathematically designed to maximise the number of salable properties. They typically also have narrow streets, minimal number of intersections (as it’s a waste of valuable space), and minimal public green space.
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 usage 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).
In fact, research derived using data from the Australian census showed that less than 15% of workers in Australia’s major capitals work in the inner-core – a trend that is only likely to grow as more employees embrace technologies such as telecommuting. It also throws into doubt expensive new rail investment, which can only ever serve a small minority of the population.
In short, 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 risk boom/bust price 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.
If you want to see the ultimate end-game of forced urban consolidation, look no further than the United Kingdom, which is arguably the most dysfunctional housing system in the developed world.
Thanks to the Town and Country Planning Act 1946, the right to develop has been virtually nationalised and the UK is ruled by NIMBYs. All of the major cities and towns in the UK are surrounded by “greenbelts” that are off limits to development. And the centralisation of government finances has also led to a situation whereby local governments receive little benefit from increased population and development, but bear most of the costs, making them anti-development.
The end result is a chronic undersupply of homes, driving-up both prices and rents. And the situation has recently been made worse by the implementation of the government’s “Help-to-Buy” shared equity scheme for first home buyers and the Bank of England’s “Funding-for-Lending” program, which have artificially increased demand and pushed against the constipated supply system to further inflate prices.
Yesterday, one of my favourite urban economists, the London School of Economics’ Paul Cheshire, posted a brilliant critique of the United Kingdom’s planning system, focusing on the rigid green belts that preclude development across the major cities and towns. The article touches on many of the perverse consequences of urban consolidation outlined above, and should serve as a warning to Australia’s planners and policy makers, who continue to advocate the use of UGBs:
GREENBELTS combine the qualities of sacred cows and juggernauts. To question their benignly green and fair credentials is to invite abuse: yet the unstoppable damage they do to societal fairness, housing affordability, the economic efficiency of our cities, even the environment, is devastating.
Greenbelts have a mystical quality, in that almost everything we believe about them is untrue. More than half the adult population think 50 per cent or more of England is “built-up”. In fact, the figure is 9.95 per cent. It is claimed we are in danger of “concreting over England”, yet even in the urbanised 9.95 per cent of the country, half the area is gardens; actual houses only cover 1.14 per cent. Greenbelts cover 12.9 per cent. Our cities are strangled by Greenbelts, creating the greatest land scarcity just where it is most needed.
So as people have become richer and sought more space, they have had to jump over the Greenbelt and commute from a distance. A recent Greater London Assembly study showed that highly-skilled workers in central London were travelling daily from as far away as Norwich or the New Forest…
Our new houses are about 40 per cent more expensive per square metre than in the Netherlands – and the Netherlands has about 20 per cent more people per square kilometre than England. Our houses are also the smallest in the developed world. In Denmark, the average new house is almost twice as big as in England…
The age of first house purchase is receding into the late 30s, and owner occupation as a tenure is falling for the first time in a century, now 6 percentage points below its peak. The underlying cause is the constriction on space for new building imposed by ringing our cities with Greenbelts…
It is land we restrict the supply of and, as the policy-created shortage of land bites harder, so houses get smaller…
Surely there must be gains? They are surprisingly hard to find. Research suggests any wider benefits from Greenbelts have always been small relative to, say, parks; and they have been very concentrated indeed. The poor are, in effect, penned into crowded parts of cities and increasingly renting, with Greenbelts far out of reach. The moderately well-off are priced out of a decent home, or have to spend two hours a day rattling through the Greenbelt in crowded trains. That just leaves a lucky few, albeit highly-educated and articulate, as the winners…
The London School of Economics… found the only value Greenbelts created was for people who own houses within them – the very rich indeed in the Home Counties, or equivalent areas around other big cities…
The fact [Greenbelts] create no value for people who do not live in them is not surprising. The commonest land use within the Greenbelt is intensive agriculture – 37 per cent of London’s Greenbelt, 74 per cent of Cambridge’s. As the National Ecosystem assessment of 2011 showed, intensive agricultural land has no environmental benefits at all. It is almost equally devoid of amenity value because access is so limited. Back gardens provide far more valuable habitats for wild life, as well as much more amenity value…
We do need to maintain green areas within reach of people; intelligently-selected green wedges around our cities could be valuable. But that would still leave more land in our Greenbelts ideal for housing than we would need for generations to come. Taking a 1km ring inside the M25 would yield enough land for more than a generation of building at current London rates, and would represent a tenth of 1 per cent of England’s surface.