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Low density living is not the answer

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Evonne Moore wrote in these virtual pages last week that Adelaide’s low-density lifestyle is under threat. As a likely future entrant into the housing market, I think that rumours of the demise of this lifestyle are greatly exaggerated — and that’s a shame. Low-density housing is not a viable solution for the complex demographic and social challenges which Adelaide faces now and in the future.

The longer we cling to low-density development policies without also acknowledging an obligation to future generations, the greater the risk of Adelaide becoming a city which favours its older residents at the expense of its younger ones.

I don’t want to argue that high-density is necessarily aesthetically preferable to the current regime – that’s a debate for another day. My argument is that the evidence for the “decline” of low-density, decentralised living in Adelaide is anecdotal at best. It ignores the fact that, save for a brief stall in prices, our homes are larger and more expensive than ever before. When that fact is not accompanied by the parallel release of land (or creative land use), then the consequence is a market which is harder and harder to break into.

Continued preferencing of low-density development favours those who contribute most to the calcification of the housing market. The longer that continues, the longer Adelaide will be a city which frustrates and risks losing its best young minds – Mateo Szlapek-Sewillo

Homes are a pretty unique asset class. For owners, they’re considered something of a “sure thing” as an investment – especially given that, in Australia, home ownership forms part of our cultural lexicon. Our home ownership rates rank consistently toward the upper end of the OECD – which is no surprise given our tax system and related government regulations which preference the owners of unproductive, interest-bearing assets and contribute to climbing prices.

At present, those families which formed the first wave of homeowners in Adelaide’s inner suburbs can choose to lock in, effectively withdrawing their homes from the buyers’ market and curtailing supply, driving up prices. They then benefit from this very shortage by enjoying the dividends of owning property inflated by their own actions. This is a metonym of a broader problem of inherited wealth – the networks of people who were fortunate to buy early are now rewarded in a massively disproportionate manner, often by simply hoarding property.

Just how expensive are Australian homes relative to those in other nations? In mid-2010, The Economist estimated they were the most overpriced in the world. Australian Bureau of Statistics data from February 2013 confirmed this is still the case. Sharply rising prices indicate that the supply of housing in Australia hasn’t kept up with the demand. Homes take a long time to build, and the supply of land expands only as fast as we build out or up.

Yet current policies only exacerbate this problem. Land release is a labyrinthine process and only possible to a point. Initiatives such as the First Home-Owner’s Grant and the relaxation of credit constraints are intended to encourage lower-income families to purchase, but these policies have had mixed success. By effectively subsidising house prices, they contribute to price inflation. The positive effects of these policies would be magnified if it was easier to spend that same money on, say, a suburban apartment. To at least have the choice is of paramount importance, and effectively underlines what it is I’m arguing for.

Adelaide’s quality of life is enviable. We ranked 5th on the 2012 Economist Liveability Index, a composite measure which ranks cities by stability, health-care, education, infrastructure, and culture and environment. That’s a nice reward for a lot of hard work and should be seen as such. But the inconvenient truth is that it doesn’t account for cost of living. If it did, I’m not sure that we’d figure so prominently. I sincerely doubt our place on this index would be endangered by increasing the pool of available housing.

Chief among Evonne Moore’s arguments, I must take particular issue with the following comment:

 There are no sound planning reasons for building dense, 12-storey tower blocks in the inner suburbs, which are some of our most beautiful and historic areas. These towers will quickly become eyesores on the landscape. We are in danger of repeating the mistakes of the British post-war housing redevelopment schemes – packing poorer people into multi-storey flats brings a range of social problems.

Many planners would dispute the first proposition of that passage, which for a start supposes that all the high-density buildings would be “12-storey tower blocks”. The second claim – that they will quickly become eyesores – is mere conjecture. The final proposition neglects to acknowledge that the problems and pathologies of the British post-war planning scheme were effectively mirrored by the New Town movement implemented in Elizabeth and championed by the Playford government. It certainly warrants more scrutiny than its casual mention here.

Australia doesn’t just have comfortably sized houses; the houses we are building now are the largest in the world – at recent estimates, 208sqm. In the 18 years to 2002/03, the average floor size more than doubled. So I don’t see how the author’s claims that this low-density lifestyle is under threat tolerate scrutiny. The built form status quo is simply not an acceptable one.

Continued preferencing of low-density development favours those who contribute most to the calcification of the housing market. The longer that continues, the longer Adelaide will be a city which frustrates and risks losing its best young minds. House prices may have momentarily stalled, but that is only because the economy which inflates them has done likewise. If you’re a young Adelaidean, it’s harder than ever to buy a house, which only contributes to the existing difficulties of contributing to the city.

Australians like large houses. What we really like, though, is having somewhere to live. The opportunity to own our own place is being given to fewer and fewer people. I don’t see how a situation like this can continue while plausible solutions are shouted down because we fear they might become “eyesores on our landscape”.

It’s not population growth which should be placed on the political agenda, it’s the entrenched interests of groups so used to the good times that they thought they would roll on forever. Let’s stop this wealth transfer from younger to older and acknowledge that high-density development isn’t just an issue of aesthetics or place, it’s one of equity and choice.

Mateo is a blogger at gutek.com.au, former participant on the Radio Adelaide program The Scenery, and speechwriter for the State Minister for Police,  Finance and Road Safety. He also aspires to one day buy his own home.

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