Start spreading the news - Australian cities must become more like Manhattan
As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.
Since 2003 I have argued that the future of Australia’s cities more likely lies in “Manhattanisation” rather than sprawl, while noting that the two dynamics are not mutually exclusive. We will increasingly build up rather than build out.
The great Australian dream of a quarter-acre block will gradually morph into a more convenient “attached” form of housing – be that a duplex, semi, terrace, townhouse or apartment – that, critically, is situated in relatively close proximity to important amenities and places of work.
As I explained in last week’s column,
Sydney and Melbourne are individually expected to have 5 million to 6 million residents (see chart). This begs the question as to where all these people are going to live. Will we build new cities, allow existing metropolises to expand ever-outwards, permit Manhattan-like densities, or embrace all of the above?
The history of our urban development offers a guide. Over the last century,
Paradoxically,
Yet if you fly into
Continuing to build out poses a number of problems. Every marginal addition of new land on a city’s periphery necessitates accompanying investments in roads, electricity, water, transport, and sewerage. Up to a point, densification can leverage off existing infrastructure.
The further we spread our residents, and the workers living in these households, the more we typically have to transport them back to their places of work (and thus the higher their carbon footprint). Densification holds out hope of truncating commute times.
And in order to build out, we are, by definition, taking fresh greenfields land away from the natural environment in order to use it for the urban one. Building up does not exhaust any new land.
Los Angeles County is a great example of a metropolitan area that has sprawled inefficiently. The population of 9.8 million is spread across great distances with an incredibly low density of just 798 persons per square kilometer. Unfortunately for LA’s residents, the public transport system is near nonexistent. If you don’t have a car in LA, you find it hard to function. This has historically resulted in serious traffic and pollution problems, in addition to undermining the city’s sense of community. In fact, LA is more like a basket of smaller cities, which have little in common.
To best service its conveniently contiguous residents,
In my 2003 report to the Prime Minster I presented several policy solutions to the conflict of interest between existing owners, who want to choke supply, and the next generation of buyers, who would like to see it liberated. One of these ideas involved giving local governments new housing supply quotas tied to public funding. This remains an option worthy of further discussion.
In contrast to a country like Japan, whose population will contract by one-quarter over the next four decades, Australia’s is expected to expand by 60% based on the Treasury’s projections.
With our rich endowments of natural resources that are conditions precedent for
One way or another, we are going to have to find ways to accommodate 5.7 million new people in the next 15 years, about half of whom will be hard-working immigrants under the age of 40.
With this challenge in mind, it is interesting to note that perceptions of the “preferred” form of tenure choice differ markedly across cities and societies. Community attitudes to housing types appear to vary according to the city’s geographic, economic and urban needs. Households in
I think that Australian’s understanding of tenure preference will continue to evolve. And here the data tells us an important story: whether you like it not, our cities are stealthily densifying before our eyes.
My final two charts show the share of
In 1992 only 24.1% of all building approvals in
Over the next 50 years our cities will densify much more than most can currently imagine. As a community we should prepare for that future today by investing in the supply-side infrastructure required to support it.
Christopher Joye is a leading financial economist and works with Rismark International. Rismark and RP Data provide house price analytics products, and solutions that enable investors to go long and/or short the housing market. The above article is not investment advice.