Housing in the Post-CBD Era

Why, in a country as big as Australia, do we insist on housing people in shoeboxes? I don’t think it was a deliberate choice. Nobody in their right mind would have dreamt up a grand plan for townhouses in Pakenham and apartments in Doncaster. There hasn’t been a plan – just decades of chart-topping immigration with seemingly no thought as to the impact on our urban landscape.

There is a place for high-density living. For years I lived in apartments that were a stone’s throw from trams, trains, beautiful gardens and the CBD, and loved it. Some of the world’s most vibrant cities are densely packed with people. That is not what we’re building. We’re building a sprawling metropolis of cheap and nasty shoebox homes overlooking gridlocked highways. In neighbourhoods where the lack of public open space was once offset by the size of the blocks, we’ve filled the backyards with units.

Once, I would have said that all this is necessary and unavoidable – supply must be increased to keep prices down. But now I wonder, at what cost? Some argue that NIMBYs are the problem, and should be overruled for the sake of the national interest. But perhaps the NIMBYs have a point. Most neighbourhoods are not better off with more soulless shoebox developments, and they know it. Many argue that the solution is to force councils to approve more development against the wishes of residents. Not only is this blatant big-government coercion, it smacks of condescension (‘those parochial NIMBYs need to be educated in the benefits of high density living’) and envy (‘how dare these rich landowners deprive the masses of affordable housing’). Not very Liberal if you ask me.

The rise of work from home has made the problem temporarily worse: bedrooms have become home offices, increasing aggregate demand. But work from home does something else; it provides an opportunity to redefine how we grow our population without making our cities worse places to live.

But first, I want to talk about how and why cities grow.

Put simply, people move to cities because there is work. For there to be work, there must be one or more export-oriented industries (e.g. mining, agriculture, manufacturing, services) operating there. The rest of the economy: hairdressers, grocers, teachers, etc. are secondary. Without the export industries, they would disappear.

Many cities that start out with a single industry, like gold mining in Ballarat and Bendigo grow to a critical mass where they can survive the decline of their main export industry. Others, like Whyalla, are fully dependent on one big factory.

People have always lived near their workplace. In the old economy this was distributed: on the farm, in the factory, at the docks. In the post-industrial services economy, it was the CBD office. In 2020, for the first time in history, a large group of workers were freed from the necessity of residing in close proximity to their place of work. The services-based economic engine is no longer confined to the CBD. It’s not even confined to the city. It’s now distributed among people’s homes, wherever they happen to live.

For half a century, the growth and character of our major cities has been totally dominated by the simple fact that people need to come in to town for work. Every major road, railway, bridge and suburb has been planned and built based on this fundamental fact. Then suddenly, almost overnight, the fact ceased to be.

Half of all office workers are now free to work from home at least three days a week. The trend is towards more, not less work from home. I wonder whether we’ve truly grasped the significance of this change, or the potential.

In my very first post on this blog, I argued that we should be taking a regional approach to population growth: investing in high-speed transport to places like Geelong, Ballarat and Warragul, and housing our burgeoning population in these places. Perhaps the strongest argument against this idea is that the jobs are in the cities, not the regions. Not anymore. The primary jobs – the ones that make a city viable – are moving to home offices, wherever they happen to be. The secondary jobs – doctors, teachers, fast food workers – will follow wherever the home offices are.

We have so much land in Australia, why are we cramming people into a few big cities as if we were a small country in Asia or Europe? Why not use this land to build spacious, affordable, liveable cities. There is much to be gained from a big population – a more diversified and robust economy, a larger defence force, more autonomy and agency in our region. But Melbourne and Sydney are big enough already. Both are big enough to be the second largest city in the US, a country with ten times our population. What else does the US have? 300 cities with a population above 100,000. Australia has just 20.

The question is how to direct population growth away from our capital cities. I’d suggest three key steps are needed:

1.      Greatly expanding regional visas with a commensurate reduction in non-regional visa places. Demand for Australian visas far outstrips supply and we can afford to put whatever conditions we like on them. Restricting more visas to the regions will help generate the critical population mass to set regional towns on a growth trajectory.

2.      Build for growth: build the basic infrastructure needed to accommodate growth before rather than after the population grows. Especially important is fast and reliable internet. One need only walk around central Melbourne or Adelaide to see the benefits of proactive and ambitious town planning. Unfortunately, the bean counters obsessed with cost-benefit analysis make proactive infrastructure spending very difficult to achieve, but it is essential nonetheless.

3.      Get the houses built: remove the red tape and council hurdles holding back development, but set high standards for that development. Unlock vastly more land, but prioritise the quality and liveability of the urban landscape over quantity of houses.

Finally, to answer two obvious objections: “what about regional NIMBYs, aren’t their views just as valid as city NIMBYs?”, and, “we can’t build because we need to preserve our prime agricultural land”. Regarding NIMBYs, I offer three justifications: firstly, many regional towns are shrinking and risk dying off without an influx of new arrivals. Secondly, the proposed developments need not drastically change the character of existing townships because it is mostly greenfield development. Finally, the ratio of new homes to NIMBYs is much greater, so there are more winners and fewer losers compared to infill developments in established suburbs.

As for preserving our countryside, it’s true that only about 6.5% of Australia’s area is quality agricultural land, about 500,000km2. Compare that with the area of Melbourne, 10,000km2. Simple maths dictates that building another Melbourne would eat into 2% of our quality agricultural land. Building 20 new Melbournes – that might be an issue. Building one or two? Surely not. The argument is a furphy.

The post CBD-era brings with it the potential to resurrect the Australian dream – if only we can seize the opportunity. We are currently building in panic mode, ignoring the fact we are gradually making our cities less liveable for no apparent gain in affordability. Why are we stacking shoeboxes when we could be doing what our ancestors did 200 years ago: building new cities that will grow and prosper for years to come.