Can activity centres supply enough housing?

Average annual growth in population of centres (%) - data from BITRE

Melbourne 2030 envisaged growth of high density housing and office employment within established suburbs would be located in activity centres, especially those with a rail station. In fact it specified that 41% of all dwellings should be constructed in activity centres over the period 2001-30 (with 31% in Growth Areas and the rest dispersed in small projects throughout established suburbs – at present though, about half of all new dwellings are constructed on the fringe).

Locating more intensive development within strategically important activity centres makes a lot of sense. In particular, it means a larger number of people will be within walking distance of frequent public transport, giving them an alternative to driving. Bigger activity centres should be more sustainable and might even cost the public sector less in infrastructure outlays and operating costs.

Yet it doesn’t seem to be happening – outside of the city centre, only a small number of activity centres are experiencing significant growth in multi-unit housing. Moreover, according to research by BITRE, Melbourne’s six Central Activities Areas (CAAs) and 25 Principal Activity Centres (PAC) only accounted for 3.6% of all population growth in the metropolitan area between 2001 and 2006. The number of people living in CAAs fell (by -0.3% p.a.) over the period and the number in PACs grew by just 0.8% p.a. – much lower than the growth rate for the metro area and the CBD (see exhibit).

Nor are activity centres generally successful in attracting employment – BITRE found jobs growth was actually negative in the CAAs, falling by 0.5% p.a. between 2001 and 2006. Jobs grew by 1.25% p.a. in dispersed areas outside of centres over the same period, but by only 0.5% p.a. in PACs.

There are reasons why it’s hard to attract developers to larger centres. Assembling land is difficult – existing holdings are in diverse ownership, values are often high and lots may be small. Moreover, Planning restrictions mean suitable sites are in short supply or have constrained redevelopment potential. But perhaps the key issue is opposition to development from existing residents.

As the strong reaction to Banyule Council’s proposed structure plan for Ivanhoe shopping centre shows, many residents don’t like the idea of redevelopment at up to 4-8 storeys in their local centre. They fear higher housing and employment densities will increase traffic congestion and noise and they expect the character and familiarity of their local centre will change for the worse. They see few, if any, upsides for them personally from a higher density centre.

It seems putting most higher density redevelopment eggs in the activity centres basket isn’t paying off. The politics of dealing with existing residents is simply too hard for all levels of government, whatever their colour. That’s not surprising given residents generally feel redevelopment makes them worse off and the planning system emphasises the interests of local residents.

Economists like Edward Glaeser and Ryan Avent have proposed ways that in theory might give existing residents an incentive to be more accepting of redevelopment, e.g. residents could buy the right to remain living at low density. These are novel and interesting ideas but at the present time they’re simply not going to fly politically.

Any redevelopment within established suburbs is going to be difficult. However the level of opposition can be reduced, although by no means avoided, where more intensive development is proposed for disused industrial areas. Even so, “brownfield” sites come with their own set of issues, like potential contamination and possible alternative uses.

Further, there don’t actually appear to be many brownfield sites. The authors of Challenge Melbourne – the discussion paper prepared in 2001 as part of the Melbourne 2030 process – estimated suitable brownfield sites within established suburbs have a total potential yield of 65,000 dwellings. That’s impressive, but even if all of that estimate could be realised, it’s not a big enough contribution, given the number of households in Melbourne is now projected to grow by 825,000 between 2006 and 2036.

So what I’m wondering is this: where is the supply of dwellings to meet demand from those who’d prefer to live closer to the centre than the Growth Areas going to come from? My feeling is there would be considerable demand for new housing within established suburbs if it could be delivered at a reasonable price. But that can’t happen while supply is restricted.

Apart from the city centre, supply will continue to come from small-scale town house projects in dispersed locations, although even then resident opposition remains vociferous so that’s never going to be enough. There might be more potential in brownfield sites than Challenge Melbourne calculated, but again, it seems unlikely it would be enough to address latent demand for more accessible locations.

I’m not optimistic that the political process will do much more to expand supply. I’ll expand on this later, but a potential option might be to give priority to locations within established suburbs where the challenges of land assembly and compatibility with neighbours are easier to address. These sorts of locations are likely to be relatively undeveloped and poorly served by public transport at present, but it might be feasible to retro-fit better services to connect them to the Principal Public Transport Network.

9 Comments on “Can activity centres supply enough housing?”

  1. gwiz says:

    makes me sad as a planner to hear this, such a policy has been in our planning schemes since inception however, we’re held back like you said by the majority of the community who don’t believe in the benefits of increased density and activity around such existing centres. It seems the only way is by piecemeal development each time a site comes up for redevelopment it’s yield should be maximised. Each and everyone of us who see the benefits of increased density need to spread the word to friends and family and be ‘champions’ in our society to try to bring about the benefits of change and reduce the extent of sprawl to our city.

  2. An excellent analysis Alan. You’ve certainly nailed many of the issues.

    I also believe the lack of a metropolitan wide planning authority contributes to the problems mentioned, especially the community backlash.

    The MMBW were very unpopular towards the end of their existence, as they were often considered to be running their own agenda without worrying about community concern. Today’s system has the opposite problem, that community concern at every opportunity politicises every decision and a lot of decisions can simply be overturned at the next election or quashed for fear of the election.

    I propose a balance between these two systems must be struck. A metropolitan wide planning authority that consists of experts, representatives from local councils and members of both major political parties. By having experts and representatives from both parties, there should be some stability across election cycles, with more resistance to NIMBYism without being completely disconnected from community concern.

    I haven’t spent enough time nutting out the details of how this would work, simply something I’ve spent some time pondering. I’m sure there are many flaws, but I still believe that some kind of authority that lies between the previous powers of the MMBW and the system we have now would be beneficial.

  3. Adam says:

    Great analysis and article.
    I agree on the problem, but question the cause. I wonder whether the lack of housing constructed in activity centres has more to do with commercial realities arising from high building coats than resident objections.
    Every council can point to countless permits for apartments in activity centres that have made it past resident objections but that are never built. They are not built because enough people are not prepared to pay what they cost to construct. The projects are simply not viable.
    If building costs were reduced (say through de-unionising building sites) apartments would cost less and they would be built. We have all heard that per square meter construction rates are 3 times as expensive for apartments than for detached housing.

    Whats you take on this Alan?

  4. rohan says:

    A metro planning authority is a good idea, but Alan is right about lack of sites for high density housing in activity centres – though on the other hand, retail doesnt seem to have had a problem expanding at chadstone, southland, eastland, and Westfield Shopingtown and now maybe northland, though only eastland and, if the station is built, southland have rail, while Westfield has a tram. It’s at older centres like Camberwell Junction, Moonee Ponds and Box Hill that high density cant find a place, except individual sites where maybe towers are allowed; density at the expense of coherent urban form. But there is also the issue of what developers want to build and where, and what people want to buy, as I think Alan you have pointed out before.

    Building walk-up flats around southland and eastland and especially chadstone are not things that developers think there is a market for, and Im not sure there is either (though there are 8-10 storey things going up around Doncaster Shoppingtown) – after all there are acres of carparks to cross if you’re actually going to walk somewhere – hmmm – why arnt those carparks slated for redevelopment ? talk about brownfields.

    Whereas there is a market for 4-6 storey on large house sites through the middle suburbs from Essendon to Camberwell to Caulfield, well at least a it closer in say Hawthorn and Toorak and Kew and Brunswick, and they are indeed happening, without being super tall or even out of character (mostly). Desirable central locations and larger sites and plenty of gaps in heritage areas have allowed thee multiple developments.

    Whereas southland and chadstaone are surrounded by 1950s suburbia, with maybe a few townhouse developments – I guess in these areas, no-one walks anywhere, except around the shops once they drive there, making higher density close to a shopping centre not very marketable. So in summary, you cant lump all the activity centres together as having the same issues, and desirability of a location makes higher density more likely, though prob not actually ‘affordable’.

  5. Johnyboy says:

    THis is just B.S. The planners are idiots. The railway being the center of development has been talked about for decades if not centuries.

    All that is important is to maintain property prices. Thats why the ring road too so long to get built. Don’t kid yourself.

    Why then the idiotic design of the souther cross station? How many thousands said they should build above the station? It did not happen. Why? so the idiots can maintain there property prices.

    A great cheer for medicority.

  6. […] I’ve pointed out before, so-called surplus sites can only make a relatively small contribution to increasing dwelling […]

  7. […] City of Melbourne – where 82% of new dwellings were in projects of 20 units or more). I’ve cited other evidence before supporting the conclusion that suburban activity centres aren’t attracting new housing on […]

  8. […] that activity centres aren’t pulling their weight in the task of increasing supply (see here and here) and that the burden of supply is instead falling on small-scale infill development, much of it […]

  9. […] Of the books I’ve read this year, I’d recommend Ryan Avent’s The gated city, He argues in this short 100 page book that opposition to density is a key reason for American economic stagnation. This is an Amazon Kindle “Single” – it costs a mere $1.99 and you read it on your computer or, as in my case, on an iPhone (not so good for the beach). I’ve cited it before, here and here. […]

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