Sydney to Abandon Radical Smart Growth Policy

Australia’s New South Wales state government has proposed a new Metropolitan Strategy for the Sydney area which would significantly weaken its highly restrictive smart growth policy (also called urban containment, smart growth, livability, growth management, densification, etc.) that has driven if house prices to among the highest in the affluent New World (Australia, Canada, New Zealand and the United States) relative to household incomes.

According to the Australian Financial Review, the Liberal-National government plans to allow the building of more than 170,000 new homes, with the vast majority being on greenfield sites, largely beyond the current urban footprint. Premier Barry O’Farrell and his party had promised in their electoral campaign in 2011 to liberalize land-use regulation and to moderate the previous Labor government’s quota that required 70% of new houses to be built within the current urban footprint and 30% on greenfield sites. In fact, however, under the Labor government’s administration, new house building had been produced at a well below demand level.

Among the major New World metropolitan areas rated in annual Demographia International Housing Affordability Surveys, Sydney has been the most unaffordable, along with Vancouver, in recent years. Sydney and Vancouver have had among the most stringent urban containment policies in the New World, and the resulting unaffordable house prices under such circumstances are consistent with economic principle.

Premier O’Farrell told the Sydney Morning Herald said the government wanted to “make home ownership a reality again” He continued “The more blocks of land (lots) we can release, the greater downward pressure we can put on housing because it’s been so high for so long.” In a press release issued by his office, the Premier recalled that ” Before the election, I said I wanted to ensure owning a home wasn’t a fading dream for young families” and noted that the massive housing package “will go a long way to delivering on that commitment.”

In the longer run (by 2031), the government intends to provide for a total of 545,000 new homes, while abandoning the practice of allocating locations based upon planning theory. The overwhelming majority of these homes are likely to be built in greenfield areas on or beyond the urban fringe, rather than in urban infill.

Planning and Infrastructure Minister Bradley Hazzard told the Sydney Morning Herald that the government intended to “‘look further afield” then the presently planned greenfield suburban growth centers. He continued: “‘We’re trying to [be] less constrictive and restrictive and what we’re saying is the marketplace should have far more of a say in what the mix of housing is and where it should be,” adding that ”it doesn’t matter” what percentage was delivered in greenfield and established suburbs. He concluded: ”No one should be preoccupied by particular prescriptive formulas.”

The government also indicated its intention to encourage one half of employment growth over the next 20 years to be in Western Sydney. Western Sydney is virtually across the urban area from the central business district. This dispersion of employment, along with roadway improvements in the area are likely to improve the metropolitan balance between jobs and housing.

The plan for greater job dispersion would, if successful, bring Sydney more into line with urban best practices, which are exhibited by the location of most new jobs in edge cities, as well as throughout the entire urban area. Sydney has among the longest work trip travel times in the New World. The one-way work trip travel time is newly reported in the Metropolitan Strategy to have reached 35 minutes. Work trip travel times are worse only in Melbourne, at 36 minutes. By comparison, Dallas-Fort Worth, with a larger population, a much lower urban area density and a mere fraction of the Melbourne or Sydney transit work trip market share has a far shorter one-way work trip travel time (26 minutes).

The Sydney developments are the latest in a trend toward liberalizing urban land use in four nations.

In October, the New Zealand government announced plans to liberalize land-use amid growing concern about the extent to which that nation’s urban containment policies have destroyed housing affordability. In the introduction to the 9th Annual Demographia International Housing Affordability Survey, Deputy Premier Bill English said:

 Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. When demand shocks occur, as they did in the mid-2000s in New Zealand and around the world, much of that shock translates to higher prices rather than more houses.

 Recent polling has shown support, by an almost 2 to 1 margin for government action to improve housing affordability, with even higher stronger support in the 18 to 34 age group, where the margin was more than 3 to 1.

The United Kingdom Cameron government is also embarked on a program to liberalize that nation’s restrictive land use policies, which former Bank of England Monetary Policy Committee member Kate Barker found to be the cause of severe housing unaffordability in a report commissioned by the Blair Labour government. Planning Minister Nick Boles has characterized the unaffordability of housing as “the biggest social justice problem we have.”

In 2011, Florida repealed its statewide smart growth mandate and closed the administrative bureaucracy that had overseen the program. Before that, the government of the Australian state of Victoria substantially expanded the urban growth boundary of the Melbourne urban area.

Adapted from an article at newgeography.com

 

Comments (10)

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  1. Good news all around. Much needed corrections of more failures of central planning.

  2. Kyle says:

    There are ancillary benefits of urban sprawl. Such as creating incentives to set up shops here and there, catering to all of the new housing.

  3. Jordan says:

    Poor Aussies. They should look at the Japanese. In order to buy a house you’re literally committing several generations of children to the mortgage. Lucky for them that whole Confucian thing happened. Not sure that’d be possible without strong feelings of filial piety.

  4. Roger Depaz says:

    Informative post, indeed. Sad to see bad policies resulting in unaffordability and hope these initiatives work for the Australians.

  5. Gabriel Odom says:

    To further validate your point, consider the city of Houston. Houston has no zoning laws to speak of, yet the economy is booming.

  6. Patel says:

    Interesting post, I think all the major cities with high costs of living can learn a lesson or two from Houston.

  7. Desai says:

    @ Patel and Odom

    The daily beast recently wrote something about Houston being the future city. Here is the link:

    http://www.thedailybeast.com/articles/2013/04/08/houston-rising-why-the-next-great-american-cities-aren-t-what-you-think.html

  8. Sandeep says:

    I would be interested to see if what you are alluding to can be applied to NYC and San Francisco so that I can afford to live there.

  9. Saket says:

    Why is Melbourne so strict, they have so much damn land? Why put regulation when we all know it brings up the cost of living for all of us?

  10. Paket says:

    I never really liked Australians, they just got lucky with all the resources that they are selling to China now.

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