Saturday, September 29, 2007

Sydney's Urban Consolidation (High-density) Depression

Brickworks, one of Australia's largest building materials suppliers, has warned that the Sydney area is about to enter its most prolonged housing construction downturn since the Great Depression, according to an article in the Sydney Morning Herald.

Sydney house prices have exploded relative to incomes. In just 10 years, the cost of the median price house, including mortgage interest, has risen $450,000 in Sydney (inflation adjusted). Sydney prices relative to incomes are now running three times prices in Atlanta, which is the fastest growing large urban area in the high-income world.

Some analysts have blamed higher interest rates for the downturn, apparently unaware of the fact that interest rates today remain well below post-World War II norms. Moreover, interest rates can hardly be cited as the cause of either the price run-up or the current Sydney depression, since neither has occurred in other markets, all of which have experienced the same global interest trends.

The problem is more fundamental and is the result of government land rationing and taxing policies, which are called "urban consolidation" (called "smart growth" in many other nations). All of this has contributed to an explosion in land costs, with little new housing being constructed. The result has been a virtual destruction of housing affordability,

Housing starts in New South Wales are at their lowest point today since 1958, according to the same article. This, in context, is extraordinary, given that there are more than twice as many households today in New South Wales as in 1958.

Wendell Cox
Demographia | Wendell Cox Consultancy - St. Louis Missouri-Illinois metropolitan region
Visiting Professor, Conservatoire National des Arts et Metiers, Paris
USA..1.618 632 8507

Heart Bypass Operations a Mistake?

The efficient circulation of people and goods are as vital to a city as is the circulation of blood in the body. Restrict the flow and the results are harmful. Yet there are people who vigorously oppose the building of new roads - they say new roads will just fill up with traffic. But that indicates a pentup demand - people do not just drive around for the fun of it. The anti-road advocates say that public transport should be developed instead. But public transport cannot do the job - look at any city around the world (with the possible exception of Hong Kong where people mostly live in bird cages).

To these head-in-the-sand obstructionists Wendell Cox says:

You read it first here. I have been advised that prestigious medical research is soon to be published suggesting that heart bypass operations no longer be performed.

The problem is that the bypass arteries simply create more blood flow, creating no relief for the old arteries. It is said that researchers were first alerted to the problem when they were exposed to the theory of "induced" traffic, whereby building new roads just creates more traffic.

It is expected that medical insurance companies will soon remove coverage for heart bypass operations, since as soon as the new arteries are made available, they fill up with blood.

Monday, September 24, 2007

Dreaming About Rail in Norwest and Macquarie Park

An article in the Sydney Morning Herald of 24 September 2007 describes the exodus of jobs from downtown Sydney to suburban office parks like Norwest and Macquarie Park. This is simply the continuation of a trend that has long been underway, not only in Sydney, but also in Paris, Portland and Pheonix.

The clueless NSW State government, which oversees transport and planning, imagines somehow that they will serve these areas with new rail systems, and reduce automobile commuting. Norwest, probably the largest new business centre in Australia will be served by one rail station, while Macquarie Park will get three.

What they don’t understand, of course, is that rail transport is about the city centre --- that there is no way any government can afford to provide the level of service necessary to serve suburban office parks. What do they expect? Do they imagine commuters from Liverpool will somehow use the overcrowded (not to mention unreliable) rail system to travel through the city centre and then to Norwest or Macquarie Park? Will residents of Penrith choose travel by rail to Parramatta, then through the city centre or Chatswood and on, circuitously to Macquarie Park or Norwest?

What makes public transport viable, even if unreliable, to the city centre, is that routes converge there from all over the urban area. No urban area can afford that level of public transport investment in more than one centre. Rail stations in Norwest and Macquarie Park may get government ministers the odd favorable headline, but they will be of virtually no account in reducing automobile commuting.

Wendell Cox