If you think that home buyers in the fringe Growth Area LGAs are predominantly young renters buying their first McMansion, then think again.
Given the brouhaha in The Age today over foreign investment on the fringe, the media might give attention to the finding that 23% of purchasers in these areas are investors. However it is not possible to deduce from the report how many of them live overseas.
But there are plenty of other interesting nuggets of information.
Rather than moving out of rental accommodation and into their first home, most fringe purchasers already own a house. Only 36% are first home buyers. Of the 64% who are ‘upgrading’ from an existing owner-occupied dwelling, a third are buying their third or fourth home.
It is therefore no surprise that the average buyer is not ‘starting out’ on the great suburban journey. Nearly half (48%) of adult buyers are aged 35 years or more. In fact 14% are aged 50 or more.
And while some bought large houses, almost three quarters (74%) purchased a single level dwelling. Moreover, 70% of homes are less than 30 squares and 47% are less than 26 squares. That suggests the great bulk of dwellings are roomy but they’re hardly McMansions. However, small dwellings don’t cut it – even though 12% of buyers are single, only 1% of dwellings are smaller than 15 squares.
The Age editorialises (21/11/10) that Melbourne 2030 is effectively dead and I agree. The latest nail in the coffin in The Age’s opinion is the apparently burgeoning growth of housing in townships and hamlets located in the peri urban area outside the Urban Growth Boundary (UGB).
I’ve argued before that this sort of “decentralisation” is poor policy (e.g. here and here). But I also think The Age has tended to ‘catastrophise’ the scale of the problem, especially with its highly misleading contention that Melbourne has “sprawled 50% beyond the official growth boundary, spanning 150 kilometres from east to west”.
However what interests me at the moment is why Melbourne 2030 failed. The key reason in my view is that it blithely assumed that enough affordable dwellings – mostly town houses and apartments – could be provided within the established urban areas to avoid the need for the UGB to be extended.
This objective was never realistic for a number of reasons. Read the rest of this entry »
The benefits of residential density are more complex than they appear. The attractions of living cheek by jowl in places like Surfers Paradise or the CBD may not apply everywhere, especially on the fringes of our major cities.
Almost everyone knows, it seems, that density has enormous benefits. It is correlated with lower levels of car ownership, fewer kilometres driven and higher public transport use. It lowers infrastructure costs and is also associated with lower consumption of energy and water. According to some, it’s even connected with higher levels of social capital and lower rates of obesity.
However most of the benefits – both private and social – do not derive from density per se but rather from location. Lots of people want to live in high amenity places like the beachfront or in proximity to the jobs, entertainment opportunities and transport infrastructure of somewhere like the city centre. These sorts of places are in short supply so demand can only be met by increasing density.
Higher density necessarily means less land per dwelling but it doesn’t inevitably mean smaller dwellings. However unless you’re filthy rich, one of the compromises you will have to make to capitalise on a sought-after location is a smaller dwelling. The 350 m2 McMansion on the fringe might at best be a 140 m2 three bedroom unit on the top of Doncaster Hill or an 80 m2 two bedroom unit in Docklands.
The point is that many of the social benefits associated with density – like higher public transport use and lower car ownership – are a function of the location, not the dwelling type. In turn, lower energy and water use is not primarily a direct function of density but rather a result of their smaller size.
This might seem self-evident or even a distinction of no more than academic interest. But as I’ve argued before, the failure to fully understand what density is, can lead to bad policy. It is also a particularly pertinent point in the context of advocating higher densities in places like fringe Growth Areas.
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 »
I noted yesterday that Melbourne @ 5 Million envisages just over half of all new dwellings constructed between now and 2030 – about 16,000 per year – will be located within the built-up area. The rest will be built in the fringe Growth Areas.
This is a significant reduction compared to the 69% share Melbourne 2030 envisaged would be built within established areas over 2001 to 2030.
But I think home buyers’ preference for the outer suburbs is also commonly exaggerated. I expect many fringe settlers would prefer a location closer to the centre if only the market could deliver a better space/price compromise.
I think one of the reasons they can’t find that compromise could be the Government’s policy of prioritising redevelopment to strategic locations, like activity centres and along main transport routes. Read the rest of this entry »
The Victorian Government set a target in its 2002 strategic plan, Melbourne 2030, that only 31% of new dwellings constructed between 2001 and 2030 would be located on outer suburban greenfield sites.
In fact, it envisaged that by 2030, the proportion would have fallen to just 22%.
This ambitious target reflected the conviction at the time that continued outward growth was unsustainable. The firm view was that a much higher proportion of growth would need to be accommodated within the existing built-up area.
The subsequent update released in 2008, Melbourne @ 5 Million, significantly downgraded the target.
Melbourne @ 5 Million “anticipated” that 47% of all new dwellings constructed over the next 20 years would be located in the fringe Growth Areas.
The new target simply reflected what the market was actually doing. There would be little danger now of getting caught out by a politically ambitious “stretch target”.
The most recent edition of the Government’s Residential Land Bulletin (March Qtr, 2010) indicates how prescient the authors of Melbourne @ 5 Million were. It shows that exactly 47% of dwelling approvals in the preceding twelve months were located in the Growth Areas.
But if you think we need less development in the outer suburbs and more in the inner and middle ring suburbs, it gets worse. Read the rest of this entry »
Kenneth Davidson claimed in The Age yesterday that Melbourne has 15 years’ supply of outer suburban land zoned for urban development at the world’s lowest residential densities of 12.5 to 15 houses per hectare.
Lowest in the world? I think that’s possibly a little harsh when Melbourne is compared with the outer suburbs of US cities. However what I’m really interested in looking at is what Melbourne’s supposed “lowest residential densities” actually look like. What does 15 dwellings per hectare mean on the ground?
An ideal case study is the new mixed use development planned for Toolern, near Melton. According to the Precinct Structure Plan, when fully developed it is expected to cover 24 sq km, house an estimated 55,000 residents and host businesses that provide 28,000 jobs.
This is an enormous project, covering an area around a fifth larger than the entire inner city municipality of Yarra. It is equivalent in area to a 2.8-kilometre radius circle – if the centre were Melbourne Town Hall, it would extend to Richmond Station in the east, Alexandra Parade in the north, Bolte Bridge in the west and Albert Park in the south.
The minimum average density set down for Toolern is 15 dwellings (per net developable hectare), the same as the target minimum for the growth areas set out in Melbourne @ 5 Million and its predecessor, Melbourne 2030. Read the rest of this entry »
There was a flurry of almost salacious excitement in the media at the end of last year when an ABS study found that Australians have the largest homes in the world. Worse, it found Victorians have the biggest homes in the country.
The Age reported that houses and apartments in Australia are bigger than those in the United States, which has traditionally had the most spacious homes:
“While Australian home sizes have risen 10 per cent over the past decade, research shows sizes of new American homes have fallen from a peak of 212 square metres to 201.5 square metres”.
Now property group Oliver Hume has thrown some new light on home sizes in Melbourne. They say that excluding Melbourne’s west, the median size of homes in the other five growth areas actually fell slightly over the last three years.
The largest absolute fall was in Cardinia, where the median home size fell from 267 sq m to 209 sq m, or by 57 sq m. Home sizes also fell in Casey, Hume and Whittlesea but increased in Wyndham and Melton. This does not, however, indicate an across-the-board change in preferences toward smaller houses.
According to Oliver Hume’s research manager, Mr Andrew Perkins, much of the drop in house size can be attributed to the increase in the number of first home buyers in the 2007-2008 period, when they accounted for an unprecedented 70% of all sales across the growth areas. Read the rest of this entry »
The proportion of new dwelling commencements planned for the outer suburban growth areas increased sharply between the release of Melbourne 2030 in 2003 and the release of the revised strategy, Melbourne @ 5 Million, in October 2008.
Melbourne 2030 envisaged 31% of dwelling starts would be located in the growth areas over the period to 2030 (page 30). It expected virtually all the rest would be located within the established suburbs, either clustered around major activity centres or dispersed across the suburbs.
The subsequent update, Melbourne @ 5 Million, made a dramatic change. It increased the proportion of dwellings expected to be constructed in outer suburban growth areas to 47% – half as much again as envisaged by Melbourne 2030 (page 3).
This change was consistent with the reality of what was happening in the market.
The authors of Melbourne 2030 probably felt at the time that 31% was a reasonable “stretch” target. Over the four years from 96/97 to 00/01, only 38% of new commencements were in the growth areas.
However four years is a short period to use as a basis for policy. As it happened this was a relatively quiet period compared to the boom that followed. Read the rest of this entry »
One of the tenets of new urbanism is that streets should be laid out in a rectilinear grid to maximise connectivity i.e. to minimise public transport and walking distances.
This research project in Seattle seems to confirm the wisdom of that principle. It compared the distance travelled by residents of two neighbourhoods and found that in Woodinville, where the dominant street form is the cul de sac, residents travel 26% more kilometres than residents of Ballard, where streets are laid out in a rectilinear grid.
As it happens, I’ve spent a fair bit of my life living on a “no through road” or similar street form and I think the advantages of cul de sacs are too often neglected. I grew up in a closed street, lived for six years in a mews and currently live with my family in a short cul de sac created in the 1950s when a larger property was subdivided into seven lots.
The great advantage of the cul de sac is low traffic. When my children were very young my wife and I were relaxed about them playing in the street because the only cars that entered the street were residents or their visitors. And for that same reason we don’t have issues with traffic noise like we used to have in North Fitzroy. These are major advantages and should not be dismissed lightly.
But cul de sacs have another advantage. If they’re not too long, they can create a sense of a place that is shared or “owned” by a small number of residents. We got to know all our neighbours well, shared child supervision responsibilities and even had an annual lunch in the middle of the road. Read the rest of this entry »