"Demand" argument nullifies rationale for urban consolidation

Less than 0.3 percent of Australia's land area is in development. In the upside-down world of politics, it should come Less than 0.3 percent of Australia's land area is in urban development. In the upside-down world of politics, it as no surprise that public policy virtually bans urban development in the other 99.7 percent. Every large urban area has adopted "urban consolidation" policies ("smart growth" or "compact city" policies) to fight the dreaded demon, "urban sprawl," which, of course, is nothing more than the spreading out of urban areas to accommodate new population and maximize economic opportunity. The reality, however, is that urban consolidation is combating the middle-income quality of life, as housing prices have predictably exploded relative to incomes as a result of the land rationing. Any competent economist would have predicted this. No economist was asked.

The urban planning community is in denial, putting forth the view that their land rationing policies have not driven up prices. Perhaps the most invoked refuge is the view that people don't want to live on the fringe, where development is banned and that they prefer to live in the cores of urban areas. Everyone has abandoned the fringe and they are all bidding for properties in places like Sydney's eastern suburbs, driving up prices. This is both disingenuous and absurd.

Before the planners managed to seduce governments into destructive urban consolidation, Australians, like Germans, French, Canadians, Americans, Japanese and Swedes were moving to the urban fringe, where housing was affordable. Then came the development bans and the perpetrators tell us that Australians are somehow different — that young families with children would much rather live in rental units without gardens and have their children play on balconies (actually the research, ignored by the planners, says the opposite).

Indeed, if the market is no longer interested in less expensive housing (and home ownership) on the urban fringe then there is no need for urban consolidation policy. Eliminate the urban growth nooses and see what happens. If we are to believe the planners, the hundreds of thousands of renting and forming households will stay put in the core… perhaps two or three will take advantage of the cheaper housing on the fringe. This is the absurdity. The planning community, which has often been more inclined to act on personal impressions, while ignoring the data, hasn't anything to support this view but a statistically insignificant sample of opinions exchanged at their inbred conferences.

There are, however, signs of hope that some states may begin to release more land for develop and release the Great Australian Dream from captivity. The governments of Queensland, which is already receiving huge migration from overly regulated (even by Australian standards) New South Wales and South Australia, with its near zero population growth. Much more is needed, but it is a start.

Wendell Cox