Addressing infrastructure issues is key to Sydney's future development
UrbanGrowth NSW, replacing both Landcom and the Sydney Metropolitan Development Authority, has the mandate to enable housing market growth by acting as the “development champion”.
It will do this via private sector investment by coordinating and delivering lead-in infrastructure and fast-tracking urban renewal projects.
Speaking at UrbanGrowth's recent conference in Penrith, UrbanGrowth chairman John Brogden stressed the need “… to deliver [for Sydney] the estimated half a million new homes needed over the next 20 years in an affordable and achievable way”.
No small task to achieve an average of 25,000 dwellings annually when the current 5-year average completion level is at 17,290 dwellings.
Click to enlargeA variety of stars need to align before Sydney returns to these levels — accelerating the approval process so as to reduce holding costs (e.g. cutting red and green tape), tackling the local affordability issue for differing market segments, and providing trunk infrastructure cost effectively or, better still, working out a way of doing so which doesn’t destroy project feasibilities.
Perhaps, to consistently produce housing at such volumes, it will require a fundamental change to our current housing delivery model — future-proofing it against GFC-style shocks — removing developer and transactional imposts, reducing the number of LGAs, re-weighting the community’s participation in the approval process so future generations aren’t denied their human right to shelter, and revisiting the government’s role in the land acquisition process.
The conference, which set out to tackle housing affordability and supply in NSW, also included a tour of UrbanGrowth’s 1,100-lot master-planned community, Thornton in Penrith, as an example of small lot housing.
The site is located immediately north of Penrith station with lots falling within the 150m2 to 350m2 range and include a variety of housing types including terraces, detached cottages, and “Fonzie flats” — small studios built atop of garages — providing a variety of pricing entry points.
Reducing the land component of the developed product results not only in more dwellings within the estate but a (generally) lower price as well.
An interesting exercise would be to see the future capital appreciation of these dwellings compared to estates with larger lot sizes — since it is the land that appreciates over time, while the building/improvements depreciate.
Achieving smaller lot sizes required the cooperation and coordination of builders, council, and utilities providers all of whom needed to share in the project’s vision.
Michael Brooks, the keynote speaker and former CEO of REALpac, outlined how Sydney can apply Toronto’s lessons for fast-tracking the housing industry to accommodate a growing population.
High density clustered around transport nodes is an integral element — surprisingly, society hasn’t disintegrated as a result.
The Ontario Municipal Board, acting as an “independent and final arbiter of land use [where] decisions are vested in good planning principles” played an integral role in progressing the ability of Toronto to compete against other cities in the Americas.
Being staffed by “development experts” such as planners, architects, ex-mayors, and so forth has the benefit of “informed impartiality” — less political, more objectivity and generally disliked by both developers and the public … “usually a healthy indicator that something is working”.
Similarly, appeals to the board need a legitimate basis in planning and be in the community interest — all costs associated with vexatious/frivolous claims are charged to the claimant.
A recent decision by the board saw a mixed-use (street level retail, commercial, residential) high-rise project for Toronto’s city centre approved with zero parking spaces … now that’s food for thought!
Click to enlargeReturning to the completion levels of two decades ago is in essence a matching problem — matching the specific housing need with the feasibility of locational supply.
Living to the geographic margins of Sydney should not mean being marginalised.
This has nothing to do with the “us and them” tribal snobbery — Sydney’s west vs the east, north, and south… and the Shire.
Instead, the question is why some 200,000 people spend more than an hour (ideally) each day commuting by rail from their homes in west to jobs in the east.
How has the city (d)evolved such that the majority of residents are disenfranchised from the opportunities afforded to those in the east?
Click to enlargeSource: ABS, BIS Shrapnel
We have investigated locational mobility (given for the Penrith LGA) by examining the 2011 census data for the previous address up to five years prior.
The results indicate that the majority of relocations generally occur within an LGA and over short distances between LGAs.
The logic underpinning the observed spatial immobility resides in the social networks people form as their tenure in a given location increases.
Life-specific issues — children’s schools, employment or means of getting there, distances from the parental home, etc. — tend to reinforce this.
Equally, time strengthens such “ties to place”, increasing the need (or demand) to reside within a specific area, or close enough to it — a significant issue for developers as this is effectively rational of purchasers within a project’s catchment area.
For this reason, the outer fringe areas will develop incrementally. Further, the costs associated with moving — the largest of which is stamp duty — also act as a disincentive to relocate.
Future development needs to be strategically located within the immediate catchment of existing infrastructures, especially transport, so that the city can function.
If Sydney is to expand further outwards — vs upwards — a significant investment in the rail network and a re-weighting of commercial activities to the fledgling CBDs of Parramatta, Penrith and Liverpool must happen — and probably upfront if housing market dynamics are to support the construction of new dwellings to the city’s fringe locations.
Put simply, almost two decades of under-investment in transport and social infrastructure coupled with a mentality that concentrates opportunity to the harbour have ratcheted fringe land pricing to a point that is largely unaffordable for new housing purchasers in those catchments and in comparison to the existing stock in those locations.
And this is most evident to the southwest of Sydney.
Martin Bregozzo is a property economist with BIS Shrapnel.