The Age breathlessly headlines the Government’s proposals for the redevelopment of Fishermans Bend as Premier Ted Baillieu’s “inner city housing revolution”. Planning Minister Matthew Guy says the area will evolve as ”Australia’s first inner-city growth corridor”.
Whoa there! I think it might be time for a relaxing cup of tea and a lie down. Let’s put these claims in perspective.
According to Mr Guy, the area under consideration is 200 Ha. That’s quite a bit smaller than the 41,000 Ha expansion of the Urban Growth Boundary approved last year.
Mr Guy also says the area is going to be developed over a 20-30 year time frame. If its total capacity is the 10,000 to 15,000 dwellings estimated by the Chief Executive of the Property Council, Jennifer Cunich, that’s at most 750 additional dwellings per year on average, and as few as 333 per year.
Just to put that in context, 42,509 dwellings were approved in the metropolitan area in the 12 months ending on 30 September 2010. Ms Cunich is quoted as saying even that’s less than we need – she says there’s a shortfall of 6,000 homes per year across the State.
While the redevelopment of Fishermans Bend is important, the claim that it’s a ‘revolution’ is hyperbole.
Likewise, the Minister’s claim that Fishermans Bend will be a ‘growth area’ – a term usually used to refer to massive outer suburban release areas – is more than a trifle exaggerated. Consider that 17,000 new dwellings were approved in Melbourne’s (outer) Growth Area municipalities in the year ending September Qtr 2010.
A common argument is that households who settle on the fringe because housing is more affordable end up worse off because of higher transport costs. They are forced to buy a second or third car and they use more petrol because they have to travel further.
Of course there’s an assumption here – that ordinary families actually could find a suitable dwelling, at an affordable price, in an area where transport costs are significantly lower than they would be on the fringe.
Consider the municipalities of Casey and Cardinia, which together comprise the largest Growth Area in Melbourne. At around 45 km and 55 km respectively from the CBD they are also the most distant fringe growth areas.
The median price of an established house and garden in Casey (Narre Warren) is $350,000. Now compare that with the City of Monash, which stretches between 13 km and 24 km from the CBD. The median price for a house in this municipality is $780,000 (although in Clayton it’s $618,000).
A more likely alternative for a settler in Monash who’s primary concern is affordability would be a unit. However the median price for a unit is $464,000 ($401,000 in Clayton).
Thus the Growth Area has a considerable advantage in price and size – it’s much cheaper and offers a three to four bedroom house with a garden compared to a two bedroom unit. Clearly a Monash location would need to offer a considerable saving in transport costs to offset Casey/Cardinia’s advantages. Read the rest of this entry »
Yes! Compared to Sydney, you get 11 km closer to the city centre in Melbourne and pay $70,000 less!
The Financial Review ran an interesting article on Saturday titled Only units deliver median inner glow. It’s paywalled, but I’ve made two graphs (click to enlarge) based on information it presents in a table on house and unit prices. The data was compiled by RP Data.
The Financial Review’s emphasis was on affordability however the sophisticated readers of this blog will appreciate that there’s a more interesting story here (although with a caveat – I haven’t seen RP Data’s full set of numbers as they’re subscription only).
Figure 1 shows that a buyer has to travel 23 km from the CBD in Sydney in order to obtain a house at the median price of $500,000. However in Melbourne the median house costs considerably less – $430,000 – and, more importantly, you only have to go 12 km out to find it. All this even though the population difference is only around 500,000 people – 4 million in Melbourne vs 4.5 million in Sydney.
Thus the bundle of locational services available in Melbourne for the dollar is significantly better than in our older sister up the Hume. Those services relate to the special attractions of proximity to the city centre – high level corporate and government jobs, recreational and cultural facilities, private schools, entertainment, etc.
The value of the city centre is brought home by that quintessential icon of Melbourne, the footy. The only place you can attend an AFL game within Melbourne nowadays is in the centre. And being 12 km from the CBD will usually be a better location than points further out for accessing Melbourne’s wealth of suburban jobs and for being closer to family. No wonder migrants are beating a path to Melbourne rather than Sydney. Read the rest of this entry »
Claims that home affordability is at disastrous levels appear to be exaggerated. The always interesting Christopher Joye points out today that the average Australian home price is $428,000 on Dec Qtr figures (median is $400,000). Read the rest of this entry »