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Sydney Suburbs (NSW) Inc.
News Release November 2005
The Penny Slowly Drops
Hi SOS Members
Sometimes it takes surprisingly
long for the penny to hit the ground.
In February we widely distributed the following press release:
SAVE OUR SUBURBS MEDIA RELEASE 15 February 2005
SYDNEY HOUSING BECOMING ONE OF THE MOST EXPENSIVE IN THE WORLD
Sydney has experienced an unprecedented loss in housing affordability. An international study comparing the affordability of housing shows Sydney is among the least affordable cities in which to buy a new home. The Demographia 2004 Housing Affordability Rankings survey comparing housing affordability in 88 cities around New Zealand, Australia, Canada and the United States shows Sydney ranks fourth in the housing unaffordability league.
"Housing costs have rocketed in Sydney" said Dr Tony Recsei, President of the community group Save Our Suburbs. "It now takes 8.8 years of median household income to buy a median priced house in Sydney" he said. "We have gone backwards. In 1980 it only took 3.5 years of income to buy a house. The current 8.8 years of income for Sydney compares with only 3.9 years for Toronto, 3.1 years for Montreal and 2.7 years for Houston which has the same population as Sydney.
"The major cause of this iniquity is the Government’s Urban Consolidation policy. The State Government has increasingly strangled the land supply, creating artificial scarcities and driving land prices into the stratosphere. In 1976 the land component of the price of a house was 32%. Now the price of land comprises 60% of the cost of buying a house.
"This unaffordability hits young people the hardest. In time the fact that new generations will not be able to afford a family home will be bitterly resented".
No one took any notice. I phoned my media contacts. ""Yes, yes" they said. They had read the release but were not interested.
Yesterday (ten months later) the Australian Financial Review published an editorial on the subject referring to Sydney. Here are some excerpts:
The Australian Financial Review www.afr.com - Tuesday 22 November 2005
Door closed on home ownership
Sydney is once again showing the way in housing - this time, how not to do it. With choked land releases and a plethora of charges on each new block, Sydney is pricing housing beyond reach. According to the Housing Industry Association, the average price of a new house and land package in the city is $580,000. Brisbane is the next highest at $400,000.
No wonder the South Australian government is extolling the virtues of cheap housing on billboards across Sydney. The lack of affordable housing could drive a generation from the city.
Last week, Prime Minister John Howard weighed into the debate. Stressing the importance of affordable-housing, he called for "more adventurous land release,policies Andrather more realistic development policies".
His comments drew fire from state governments but they go to the heart of two problems fuelling the Sydney crisis. With urban consolidation the mantra, land releases have been kept to a minimum. And with the focus on budget surpluses, the cost of servicing new land has increasingly been passed to buyers.
Both policies make sense in moderation. Every state government is trying to restrict urban sprawl and every government passes some infrastructure costs on to buyers.
But for a decade, former premier Bob Carr in effect closed the door on Sydney. Planning disputes were allowed to fester and some major land releases took more than 10 years to move from drawing board to sod turning.
Premier Morris lemma claims that is in the past. NSW, he says, is "open for business". Within weeks, his can-do Planning Minister, Frank Sartor, will release plans for major expansions of the north-west and southwest sectors.
Today (23rd Nov 2005) The Australian refers to the subject. The bold type is my doing.
COUNCIL elections, one may think, are an exercise in democracy, even if a frequently corrupted one. There are those, however, who beg to differ. In particular, the goings-on in Melbourne's leafy eastern suburbs are looked on with disfavour by those who believe citizens should do what they are told. Such as Brian Welch, the executive director of Master Builders Australia.
What are these unruly citizens doing? According to a sternly disapproving Welch, as reported by The Sunday Age, they are threatening to disrupt the Victorian Government's Melbourne 2030 development plan.
Welch estimates that 42 per cent of candidates in eastern suburbs council elections are opposed to the plan or key components of the planning policy. "It seems the eastern suburbs [are] littered with council candidates who are taking a populist position with residential development, practising a form of nimbyism," he complains.
Unfortunately for Welch's peace of mind, they aren't the only ones who think the 2030 strategy is a stuff-up and that there are votes in saying so. Last Wednesday, just four days after the Welch pronouncement, the state Government announced dramatic changes in its plan.
It won't admit it since being disingenuous is a hallmark of modern public office, but it has obviously decided that taking its 2030 plan into next year's state election could be a bit tricky.
The idea behind the plan is to force much higher dwelling density on metropolitan Melbourne while strictly limiting urban sprawl through the imposition of an urban growth boundary.
Naturally Premier Steve Bracks and Planning Minister Rob Hulls deny there has been any change of plan, only a minor refinement. This just happens to involve the release of 25 years' supply of new development land on the city's fringes. Not urban sprawl, of course.
What has gone wrong? Well, for one thing, a lot of the citizens who are supposed to put up with higher density development in their suburbs don't care for it at all. For another, a lot of the ageing baby boomers who are supposed to move conveniently out of their houses into high-rise apartments located in "activity centres" based on public transport and shopping hubs don't like that idea much either.
The declaration of urban development boundaries also started a land rush by developers and delivered massive property price gains to those lucky enough to own land inside the boundary, while their neighbours across the road looked enviously on.
However, the prices developers paid, combined with various development charges (a new $8000 a block infrastructure tax was also announced last week) is putting land out of the reach of many home buyers.
The release of 25 years' supply of new housing land on the urban fringe is supposed to put downward pressure on prices that the earlier tight limits helped drive sky high.
But it is also a tacit acknowledgment that sensibly managed urban sprawl, with reasonable infrastructure charges on developers, may turn out to be a smarter solution than the high density, high-rise living loved by Labor governments and European-influenced urban planners.
Victorian Opposition planning spokesman Ted Baillieu says the assumption in favour of higher density urban living is just that: an unquestioned assumption that is open to serious challenge.
Melbourne demographer Bob Birrell calls the 2030 strategy a fantasy that is inconsistent with Melbourne's future demographics and that will destroy urban amenity and character in Melbourne suburbs quite unnecessarily.
Interestingly, in Sydney, where the planning challenge is most acute, NSW Government Planning Minister Frank Sartor is also promising to force at least 60 per cent of new residential growth into existing suburbs.
But before his metropolitan strategy for Sydney's development is even announced some important changes of tack are in evidence.
More land will be released, the Government is under powerful pressure to cut and cap infrastructure charges on developers and green zones are being cut back in new land release areas.
Sartor got to the nub of the Realpolitik involved with the following comment: "There was a bit of blue-skying about the lifestyle zones. But when you are starting to affect people's property values, then there is a problem."
Indeed there is, as the Brack's Government has discovered.
Bob Day, president of the Housing Industry Association, is a home builder on a nationwide scale and, not surprisingly, is a strong proponent of urban sprawl. He speaks disparagingly of the fashionable push during the past two decades to limit urban growth and restrict the boundaries of our cities.
This, he argues, has had several unintended consequences.
The most devastating has been the extent to which urban consolidation policy has stifled land supply and sent land prices through the roof.
It is a message that at least some state governments are belatedly getting.
"The case for urban consolidation has been advanced on the back of a number of arguments; namely, that it is good for the environment, that it stems the loss of agricultural land, that it encourages people on to public transport, that it leads to a reduction in motor vehicle use and that it saves infrastructure costs for government," Day says.
"None, I repeat, none of these is true."
Surprising as it may seem, he is probably right. And we may just be starting to see a successful backlash against the urban planning orthodoxy that has ruled recent decades. That won't come as a surprise to ordinary Australians, who have always recognised our abundance of land and the function of an expanding urban fringe in sustaining a lifestyle they cherish.
It also hasn't escaped the attention of John Howard, who last week advocated "more adventurous" land release and development policies.
Need I say more?
President, Save Our Suburbs
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