This week’s Grattan Institute report into housing affordability suggested that building an extra 50,000 homes per year would lower prices and “stem rising public anxiety about housing affordability”. But where would we build them?
The obvious answer is the city with the highest population growth, Melbourne, which has also taken The Economist‘s ‘Most Liveable City’ award for the past seven years running.
That’s easier said than done because some parts of the city are starting to feel quite unliveable, whatever The Economist says.
The city is in catch-up mode, trying to expand roads, rail, schools and hospitals to cater for population growth averaging 2.3 per cent a year for the past decade.
That means crawling queues of cars on the major roads, packed carriages and frequent disruptions on the rail network, and a productivity drag for a city struggling to get to school and work, or to deliver freight.
The Bureau of Statistics notes that over the past decade five of the 10 largest-growing areas in Australia were in Melbourne: “These were the outer western suburb of Tarneit (up by 28,800 people), inner city Melbourne (26,200) and the outer suburbs of Cranbourne East (22,600), Truganina (21,800) and Doreen (19,200).”
Those far-flung suburbs are so ill-served with transport and services that the United Nations does not even count them as ‘city’ at all – it classes them as ‘metro areas’, which lack the facilities of the inner ‘urban agglomeration’ and ‘city proper’ areas.
So while the obvious place to build new dwellings is ‘Melbourne’, the outer fringe is not the place to do it.
The Grattan Institute notes: “To build more homes, state governments should fix planning rules to allow more homes to be built in inner and middle-ring suburbs of our largest cities.
“More small-scale urban infill projects should be allowed without council planning approval. State governments should also allow denser development ‘as of right’ along key transport corridors.”
Melbourne has done pretty well on the inner-city, small apartment front – something that has helped it cope with a lucrative foreign student boom.
But that transient population is not the main game. The ‘middle ring’ suburbs need serious retro-fitting with public transport and a range of housing styles, from tiny studios, to low-rise apartments, to larger terrace housing and townhouses.
Lead author of the Grattan Institute report, John Daley, tells The New Daily on Tuesday that Melbourne dropped the ball some years back on the kind of infrastructure that would make that possible.
“Melbourne got a long way behind the curve but Infrastructure Victoria [which prioritises major projects] has now well and truly woken up,” he says.
There is a frenzy of road and rail work underway, but Mr Daley says Melbourne, like Sydney, would struggle to do this retro-fitting work any faster than at present.
There just aren’t enough skilled construction workers available after a year of largely infrastructure-driven job creation.
The important lesson in Melbourne is that a ‘liveable’ city sat on its laurels too long and is now dealing with the consequences.
The pain of traffic jams and full trains can easily be turned into populist campaigns to ‘slash immigration’, as former PM Tony Abbott tried to do recently.
The Grattan Institute sees that path as an undesirable last resort: “Reducing immigration would reduce demand, but it would also reduce economic growth per existing resident.
“First-best policy is probably to continue with Australia’s demand-driven, relatively high-skill migration, and to increase supply of housing accordingly.”
It is not too late to have the first-best policy, according to property consultant Dr Shane Geha, but drastic reform of planning process in those middle-ring suburbs must come first.
Dr Geha, whose consultancy works on major rezoning projects, says that paradoxically it is too few migrants rather than too many that have held Australian cities back.
He argues that the “efficient, clean, air-conditioned and safe” public transport networks found in major cities around the world must be built here, but pre-emptively rather than in the current catch-up mode.
To be able to pay for that, he says, a larger cohort of 20- to 55-year-old taxpayers is needed to help finance the transition of Australian capitals into fully fledged cities.
In pure economic terms, he’s right, though so far politics has managed to block that kind of forward thinking.
It is only three years, remember, since then-prime minister Mr Abbott was refusing to fund urban public transport at all.
That’s something for Melburnians to dwell on, perhaps, next time they’re fighting their way to work.