Maintaining the golden age for some Sydney suburbs, density for others

Urban density has become controversial in Sydney. The broad consensus among state policymakers is that we must have urban growth and a denser city, but where?

Density in a scientific sense is the measure of the volumetric mass of an object. But planners think of density as the mass of people or jobs over land, and the community seems to think the denser a place gets, the worse it becomes.

Sydney’s current urban density policy is generally about quarantining urban density away from established inner, east and north shore areas and accommodating growth in old industrial areas, busy roads, commercial centres, around rail stations and in general, out west.

The Greater Sydney Commission’s 2016-21 housing targets tell part of the story: Mosman and Woollahra are expected to provide a modest 300 extra dwellings over this period, whereas Parramatta and Canterbury – Bankstown will provide 21,650 and 13,250, respectively.

And then the current metropolitan plan divides Sydney into three cities, the Harbour City (established Sydney) the River City (Parramatta) and the Western City (Liverpool to Penrith).

This plan is counter intuitive as real estate markets have been telling us for years that the real city is established Sydney. Surely, that’s where the density should go?

Theories to explain Sydney’s density conundrum

Before cars, most cities were reasonably dense. The model of city formation was production and exchange based; houses were built near jobs. Sydney’s 19th and early-20th century terrace house and tram city was an expression of these processes. 

This model of city formation ceased to exist post war. Theorists in the 1970s and 80s (Manuel Castells, and others) recognised that developed countries were moving away from nation state production-based city formations into a more global era of consumption-based cities.

The most pronounced and early indication of this shift was the process of urban gentrification.

The previously unglamorous inner city became popular because it was good to be near work, now an office job in the city, and older neighbourhoods had character that the suburbs lacked.  Increasingly, wealthier households sought and paid to consume the amenity of a place, that amenity might be proximity to the city, historic streetscapes, harbour views or an ocean beach. 

Gentrification creates winners and losers. Economist Thomas Picketty tells a story of how in the last few decades we have reverted to the traditional model where labour’s share of income is dwindling relative to returns on capital. The good times for labour post-war were a historical aberration. 

Another economist Matthew Rognlie provides a critique and update on the Picketty thesis, stating that the emergences of asset wealth in western society is not just about productive capital outperforming labour, but increasingly about the value of housing and the scarcity of the most sought-after housing driving up its value and then transferring income, in the form of capital gains, to home owners.

Rognlie targets NIMBYism (Not In My Back Yard) as the prime culprit of this transfer.

Both these views are based on economic data from Europe and North America. This story fits Sydney well and not without supporting local research, such as a recent Reserve Bank paper that quantified that zoning restrictions account for up to 73 per cent of the price of a detached house in Sydney. [A theory that has been challenged this article by The Fifth Estate and a second by John Brockoff, PIA – Ed]

NIMBYism in high-amenity and inner city areas in Sydney is a double whammy; it makes both housing and jobs hard to get. Housing becomes expensive and new homes are moved away from the best jobs that are disproportionally being created in inner city areas. Why would a city want to accommodate this trend as its metropolitan policy?

What’s happening in established Sydney?

Sydney east of the Harbour Bridge is busy developing. Based on development monitoring figures in 2012-2013 and ABS Local Government Area (LGA) data, Woollahra and Mosman spent $7921 and $6706 per household, respectively, on “development”. At the same time, their populations grew by approximately 3 per cent between the 2011 to 2016 census.

Comparatively, Blacktown and Liverpool spent $2621 and  $3284 per household and grew by 12 per cent and 14 per cent, respectively, in the same period. In a value sense, there is more happening in established Sydney than growing Sydney, and it is largely about reinvestment by the already well housed.

The LGA of Waverley is a good example of this development trend. Waverley is on the coast and prime established Sydney.

Urban consolidation tends to happen a block or so back from the coast, and the prime coastal sites are reserved via a combination of zoning and a real estate market that values one big house more than various smaller ones (examples pictured).

Figure 1 – 284 Campbell Parade, Bondi (4 units to 1 house)

Figure 2 – 8 Pacific Avenue, Tamarama (4 units to 1 house)  

De-densification takes place under specific conditions and takes many forms. The site had to have a unique amenity characteristic, such as the unassailable ocean views of 284 Campbell Parade and 8 Pacific Avenue, and zoning that made urban consolidation difficult.

The better the location and the lower the zoning, the more likely there is to be an amalgamation with the adjoining unit, a conversion of the duplex into a big house, or the rebuilding of the old interwar flat building with six units and no parking into three whole-floor penthouse units with parking.  When well-located places down-zone their best land, development does not stop.

Sydney’s dynamic real estate market should be something planners pay more attention to. The surging demand in established Sydney is a desire line that tells us where people want to live. 

Under zoning prime urban land entrenches development conflict

Planning regimes in established Sydney that seek to maintain the status quo achieve regressive city-building outcomes. A denser established Sydney puts households near opportunities, potentially creates fairer housing markets, makes better use of existing facilities and infrastructure, and ensures that the next round of city infrastructure will be compact and well used.

It also makes motorways less likely and allows for a better-looking and more vibrant city. What does Sydney have to lose and why has the current policy of metropolitan decentralisation been accepted with so little debate?

Under zoning prime urban land entrenches development conflict.  Coastal and harbour Sydney zoned for houses become places of perpetual petty development conflict. The real value in these sites is the land and not the building.

Put aside urban fairness and sustainability, a rational consent authority would be rushing to approve some form of strata titled multi-dwelling accommodation on these sites, just to slow down the endless fighting over views and exploding court budgets that the inherent irrationality of under zoned prime land drives.

It is the irony of progressive politics in established Sydney that the under zoning of these places was created with leftist intentions to “save the urban environment” and have, in effect, turned what were often socially mixed areas into enclaves for the very wealthy. In a denser established Sydney wealthy households will still own the penthouse but there will be spaces for others. 

The planning purpose of low density and conservation zonings in established Sydney seem to assume that the status quo can be preserved and that somehow these areas can be preserved and a “golden age” maintained!

That will never happen in an economically successful city like Sydney. Established Sydney needs a more generous and purposeful role in accommodating Sydney’s population growth. Without that purpose these areas do foster development, but that development is largely refashioning older neighbourhoods into housing monocultures for wealthy households.

Philip Bull is a Sydney-based urban planner currently working in development consulting.

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