What type of housing do we prefer?

Posted: June 25, 2011 | Author: | Filed under: Housing | Tags: , , , , , , , , | 6 Comments

Comparison of preferred housing, existing stock and current supply (Grattan Institute)

The Herald-Sun reported last week that “the great Australian dream of owning a home on a quarter-acre block might no longer exist. Instead, Australians want more town houses and apartments in the more desirable areas”.

The important words are the last five – “in the more desirable areas”. Australians still love their big, detached houses but they also value location. The baby boomers could have a detached house on the suburban fringe and still have reasonable access to the rest of the city, but those days are vanishing. Now, people who want to live in an accessible location increasingly have to forgo space and accept a smaller dwelling, often a town house or apartment. As illustrated here, those leading this trend are young, small households without dependents – they’re less sensitive to space than families and place a higher value on density.

The Herald-Sun’s interest in this issue was sparked by a new study by the Grattan Institute, The Housing We’d Choose, on the housing preferences of residents of Sydney and Melbourne. It shows that more than half of households in these cities would rather live in a multi-unit dwelling in the right location than in a detached house in the wrong location.

This presents a serious problem for policy – the existing stock of housing no longer matches up with resident’s changing preferences. The Institute finds that a whopping 59% of Sydneysiders and 52% of Melburnians would prefer some form of multi-unit living. Yet this type of dwelling makes up only 48% and 28% respectively of the existing housing stock in the two cities (see first exhibit). Moreover, in Melbourne, developers are continuing to under-provide medium and higher density housing, leaving households with little choice other than to live in sub-optimal locations, albeit in a detached house.

I must admit I was disappointed with the Grattan Institute’s first report in its Cities series, The Cities We Need, so I wasn’t expecting a lot from The Housing We’d Choose. It’s not that there was anything technically wrong with the first report, it’s just that it seemed a curiously pointless exercise – as I noted here, it’s so high-level it didn’t take the debate on urban issues anywhere or advance the cause of better policy.

This time however the Institute has applied all those brains and resources to a meaty and relevant issue and, moreover, gone about it in a logical and determined way. While The Housing We’d Choose has some flaws, it shows up the limitations of the research being churned out by some of our local universities and lobby groups. This is the kind of study they should be examining closely.

The headline finding – that people are prepared to trade off dwelling size and type for greater accessibility – may seem self-evident, but the Institute has attempted the important task of measuring this preference. The researchers sought to simulate real life. They gave a sample of households in the two cities a range of real location, housing type and dwelling size options and asked them to make trade-offs in order to arrive at their preferred combination. The smart thing is the trade-off was constrained by real-life prices and the real incomes of respondents. Read the rest of this entry »

What’s good (and bad) about greater diversity?

Posted: February 13, 2011 | Author: | Filed under: Planning, Social and community | Tags: , , , , , , , , , | 6 Comments

High-level city objectives in The Grattan Institute's 'The cities we need'

A standard objective these days in high-level city strategic plans is greater diversity. It’s mentioned, for example, in Melbourne 2030, in the Committee for Melbourne’s Beyond 5 Million and in The Grattan Institute’s The Cities We Need (see graphic).

The Grattan Institute says diversity is important because “many economists think that mixing of ethnicity, age, culture and education is important for a modern knowledge economy, in order to stimulate and disperse ideas”.

But according to Dr Andrew Leigh, it’s not necessarily all mother’s milk, at least in relation to ethnic diversity (which is what most discussion of diversity in Australia is about). In his new book on social capital, Disconnected (which I’ve discussed before), he points out that there is a negative correlation between trust and ethnic diversity:

Residents of multi-racial neighbourhoods are more likely to agree that ‘you can’t be too careful in dealing with most Australians’. In particular, neighbourhoods where many languages are spoken tend have lower levels of trust…

This accords with the findings of a succession of studies of ethnic diversity in the US and other countries. We will have to work harder, Dr Leigh suggests, if we are to make Australia both diverse and high trust.

Let me emphasise that Dr Leigh, who is the new ALP member for Fraser in the ACT and until the last election was a Professor of economics at ANU, is a supporter of immigration:

A spate of studies suggest that continued high levels of immigration will most likely bring a raft of economic and social benefits to Australia. But we should not gild the lily. Most likely, higher diversity will lead to lower levels of interpersonal trust…..the challenge for policymakers is how to maintain the current levels of  immigration while mitigating the impact on our social and political fabric.

But how do you mitigate that impact? Most city policy documents don’t even acknowledge that there might be potential downsides to ethnic diversity. Nor do they usually specify what the spatial dimension is, much less what specific policies ought to be pursued. Read the rest of this entry »