Photo by Kelsey Chance

News from the front desk, Issue 528: The NSW Productivity Commission’s White Paper, released this week reiterated concerns that Sydney’s housing supply was not keeping up with demand leading to an availability crisis likely to worsen over the coming decade. 

Nothing new in terms of Sydney’s favourite gripes, we know, but the lengthy report which took three years to create offered some stark observations and controversial suggestions for rectifying the issue that we found particularly interesting.

Delivered by productivity commissioner Peter Achterstraat, the report cited figures showing a shortage in NSW of 54,000 dwellings, down from an estimated 100,000 thanks to a boom in completions since 2016 along with the more recent impact on immigration from COVID-19.

Our assumption was the solution to this problem had already been landed on. 

New homes should be built in areas surrounding Parramatta and further west, making Sydney a “metropolis of three cities”. New and innovative infrastructure would make travel a breeze, essential services would spring up to support shifting populations, and the outer areas would become as liveable as anywhere else.

This approach of taming the western frontier has dominated for several years at least. So much so that according to government housing supply forecasts, just 20 per cent of new dwellings are expected to be built in LGAs within 10 kilometres of the CBD.

According to the Greater Sydney Commission’s 2016-21 housing targets, the wealthy enclaves of Mosman and Woollahra were expected to provide just 300 extra dwellings, whereas Parramatta and Canterbury–Bankstown were up for an extra 21,650 and 13,250 new homes respectively.

This all seems fine and dandy from the perspective of the north shore NIMBYS and anyone else lucky enough to own property close to the CBD where you can have your green space and eat it too.

Established residents get to enjoy the benefits of green-tree living within spitting distance of the CBD while others gratefully enter the housing market as it expands around peripheral hubs, meaning they too can have a block of land close to where they work and play. 

But the reality may not be so cut and dried. Grand plans for a “metropolis of three cities” are yet to fully materialise, and the hub and spoke model, while still holding water on paper has been slow to spring off the page and into glorious reality. 

Charter Hall’s head of office development Andrew Borger told our recent Back to My Happy Healthy Workplace event that while residential trends were showing a shift away from CBDs, employment was yet to keep up.

Borger acknowledged Parramatta was going from strength to strength but said that as a whole, organisations were yet to abandon the CBD in any meaningful sense. 

The White Paper suggests that inner city suburbs should be sucking it up and adding more population density, as this is where people want to live.

“Restrictions on the density of development have the effect of reducing housing supply where constraints are binding—that is, in locations where developers would like to build more apartments than the regulations allow,” the report says. 

“These locations are typically inner suburbs close to jobs. These restrictions push more of the population into middle and outer suburbs, reduce the number of dwellings overall, increase the cost of dwellings, and prompt more people to share dwellings.”

So with developers eagerly waiting in the wings with visions of multi-million dollar apartments which sell themselves, should we be adding density to Sydney’s more highly sought after inner suburbs? 

Not in my backyard

As the White Paper acknowledges, rectifying the balances and trade offs of high density is a challenge. As well as economic and environmental impacts, the need to accommodate future residents in an area needs to be weighed against the preferences of those already living there.

“Many people are in favour of adequate housing to meet the needs of the population, for example, but their direct interests may trump those of the public if a development is proposed in their neighbourhood,” the report said. 

“Planning should look through the interests of specific groups — whether they are vocal resident groups or developers — to meet the needs of the community as a whole.”

But the community, it turns out, is not very welcoming. 

The problem is so pervasive that in 2013 a report was released titled “understanding and addressing community opposition to affordable housing development” by the Australian Housing and Urban Research Institute.

The sprawling 183 page report claimed that for years, communities across Australia had opposed government efforts to create affordable housing through protests, acts of vandalism, legal action and more.

Last year we reported on ultimately unsuccessful efforts to save an Erskinville community garden from being turned into apartments. The villain of the saga was apparently Sydney Lord Mayor Clover Moore who ultimately approved the development, while another councillor Kerryn Phelps fought to preserve the garden. 

“The problem is if you build more high density without that green space infrastructure, then it decreases quality of life and the health of the people in the area,” Phelps said at the time.

In reality, between the need for more housing and the imperative to preserve green space the line between good and evil is rarely as clear as we would like it to be. It’s hard being an inner-city leftie sometimes. 

Just today we published a story by Greens candidate for Burwood Council, Ned Cutcher, about a development in Burwood that was receiving community pushback, with its glitzy offering of over 1000 brand new apartments, conveniently located on the trainline, along with shiny new amenities including a new shopping and cinema complex. 

Cutcher points to the history and character of Burwood, which for those who don’t know is rather charming, as well as the impacts on congestion and house prices as valid reasons to oppose the development. Reasons that could be applied to most established suburbs. 

John Brockhoff from the Planning Institute of Australia warned against the tendency of overlooking these factors in increasing housing availability and questioned the Productivity Commission’s approach. 

“While there are good proposals in the white paper, they missed the point with respect to planning on the need to understand cities as places,” Brockhoff said. 

“While planning for more inner urban capacity is important for managing growth and change – it is not the silver bullet for housing affordability.”

Building homes where people want to live

According to the White Paper, “when we think about housing needs, we think about one of housing’s most important characteristics—location.”

While reiterating the cost constraints of providing transport infrastructure, the report emphasised the need for housing to be located close to jobs, social networks and other amenities crucial for wellbeing. 

The report offered a handy comparison that a nation of farmers and miners can understand.

“In regional areas, primary industries such as agriculture and mining derive their value from the nutrients and minerals in the land,” it said.

“In cities and towns, the value of land comes more from its proximity to employment centres, infrastructure, and other amenities.”

Great steps have been taken to make Parramatta a desirable place to live. A trip to the Riverside Theatre followed by a meal on Church Street will have you relishing the novelty and maybe even consider moving to the lovable conurbation yourself.

So when it comes down to it, is being distant from the CBD or spending every weekend in the car visiting friends and family a “Harbour Bridge too far” for potential home-buyers?

Maybe not. 

As always these days we can’t talk about anything without mentioning COVID-19 and talking to leading property analyst and founder of SQM Research, Louis Christopher suggests that the virus has had a major impact on housing trends.

According to Christopher, the data has shifted and regional areas are now being inundated with people all too eager to escape the CBD. 

While the shift is largely due to the impact of COVID-19, Christopher is not so certain that after the virus concerns subside, demand will return as strongly to the inner suburbs. 

“There has been a fundamental significant change in what buyers want in a property. The nature of demand has fundamentally changed due to Covid,” Christopher said. 

“The change is that people wish to live in regional Australia and outer suburban capital cities and they wish to live in larger properties. People have used covid as a trigger for a lifestyle change they always wanted to do. To get away from the city.”

According to Christopher, while prices for freestanding houses are surging, in the inner-city CBD apartment market prices are actually falling. This makes sense in terms of the reduction of new immigrants, who make up a large portion of full-time CBD residents, and the desire to escape lockdowns and highly populated areas while the virus lingers. 

But Christopher thinks the current moment could hold more potential than a temporary shift. He says that if our leaders mobilise now they can create the atmosphere to keep regional areas enticing and draw even more people away from the cities.  

“I’m hoping that out of this move to regional townships that perhaps planners will reconsider what is important and where they should place their resources. We’d be better off spending our resources in building up regional townships,” Christopher said. 

Whether covid provides the motivation we need to shed urbanisation remains to be seen. Even Christopher acknowledges that most buyers still want an inner suburban home, they just happen to be in short supply and extremely expensive. You’re telling me. 

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  1. Meanwhile, up in some of the regions of NSW the influx of city people who think they can work from home while living in places like Byron bay are making the place less affordable for renters and home buyers and making the place unaffordable for people who have lived there all their lives. Then there is the problem of finding affordable housing for the teachers, service workers etc. that these bloating communities need to run properly.
    Then there is the longer term crisis which may come when work from homers suddenly realize their job security would be better if they moved back to something that allowed them to work from home or in the CBD depending what employers want.

  2. Why do we believe that we can cater for ever increasing populations by increasing densities? House prices are a function of supply and demand, if you can’t , and we certainly don’t want to, meet supply then you cut demand by reducing immigration the major source of population growth.

  3. The critical issue seems to be the lack of jobs and infrastructure across the city then, not the urgency to create density in only a few locations. I am also skeptical of approaches that blame communities for caring about place in the face if (what the evidence shows us) are fairly poor examples of increasing density over the past 2-3 decades. Also there are many more AHURI member schools than those two listed.