Democratising Prosperity: Global Perspectives on Housing Affordability. Housing Affordability Crisis in Australia EXAMPLE OF SYDNEY

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1 Understanding Urban Sprawl Public Transport: Hopeless Rhetoric Swedish Dream Stockholm Japanese Dream Sapporo Nicolai Ceaucescu Father of Smart Growth Democratizing Prosperity Social Housing Bucharest Not enough people going to the same place at the same time Don Valley Parkway & Commuter Rail Toronto Portland: The Reality of Failure New Sprawling Commercial Development Portland Suburbs The Role of Home Ownership Spanish Dream Barcelona Threatening the Dream Urban Consolidation Review By Wendell Cox 3 August 25 A BROADER ISSUE The issue is not Democratising Prosperity: Global Perspectives on Housing Affordability Australian Dream Brisbane Land use Cities The issue is Quality of Life Social Equity Future of the Nation Housing Affordability Crisis in Australia EXAMPLE OF SYDNEY Inflation Adjusted Sydney: Median House Price GDP per Capita (AUS) Housing Affordability in the USA THE RULE, NOT THE EXCEPTION The American Dream St. Louis 23 July 25 OUTLINE UNDERSTANDING URBAN SPRAWL PUBLIC TRANSPORT: HOPELESS RHETORIC PORTLAND: FAILED MODEL BACKGROUND: DEMOCRATISING PROSPERITY HOME OWNERSHIP AND PROSPERITY THREATENING THE GREAT AUSTRALIAN DREAM German Dream Leipzig NOT A BRIEF FOR SPRAWL LONE MOUNTAIN COMPACT absent a material threat to other individuals or the community, people should be allowed to live and work where and how they like. 1

2 Understanding Urban Sprawl Paris of Tourists & Urban Planners Population 82% Outside City of Paris Paris Suburbanization: Employment 67% Outside City of Paris Paris: Avenue de l opéra Paris Missed by Tourists & Planners Brisbane World s Most Beautiful Suburbs? French Dream Paris Urban Sprawl is Suburbanisation HISTORY OF URBAN GROWTH IS HISTORY OF SPRAWL The Declining Human Footprint MIRRORS TREND IN CANADA & UNITED STATES Substantial Productivity Improvements Urbanisation 21 (<.3%) Human Footprint Reduction Agriculture & Urban Universality of Auto-Based Sprawl URBAN DENSITIES COMPARED TO PRE-AUTO ERA 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 19 Now Urban Population Per Square Kilometer Pre-Auto Japan W. Europe Australia Canada U.S. 2

3 Suburbanisation in Barcelona Suburbs Core Spanish Dream Barcelona Suburbanisation in Tokyo Suburbs Core Urbanisation: 7, Square KM Japanese Dream Tokyo Romanian Nightmare Bucharest 3, 2,5 2, 1,5 1, 5 Urban Area Densities AUSTRALIAN & NEW WORLD SIMILARITIES Urban Population Per Square Kilometer SURPRISES Sydney More Sprawling than Los Angeles Los Angeles Least Sprawling in New World Ceaucescu: Understood Curbing Sprawl FATHER OF URBAN CONSOLIDATION Los Angeles Toronto Sydney Perth Brisbane Edmonton Adelaide Melbourne Auckland Atlanta 3

4 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Suburbanisation Dilutes Congestion TRAFFIC INTENSITY IN WORLD URBAN AREAS Vehicle Hours/ Square Kilometer By Population Density Under ,999 2,-3,999 4,-7,999 8, & Over Suburbanisation: Faster Work Trips INTERNATIONAL EXAMPLES Minutes One-Way Dallas-Fort Worth Houston Los Angeles Atlanta Sydney Paris Tokyo Daily Travel Time per Capita TALE OF TWO CITIES: SYDNEY AND ATLANTA Minutes 72 Atlanta Similar Results for Dallas-Fort Worth, Houston Comparisons with Sydney 79 Sydney More Air Pollution at Lower Speeds 5 CO NMHC VOC CO Based Upon Index of 1. at Lowest Point for Each Pollutant By KM per Hour NOx NOx Jobs-Housing Balance Myth Other Location 17.9% THE RECORD Hong Kong: Average Work Trip 7.7 KM Neighborhood 25.9% Job Location 17.9% Other Reasons 17.7% House 2.5% Reason for Neighborhood Choice US Census Survey 4

5 US SUBURBS LESS EXPENSIVE THAN CORES $35 >7 USA Municipalities $3 Fees/Capita: 2 $25 $2 $15 $1 $5 $ Exaggerating Suburban Costs Water Sewer Density 3.2 Density 1,88 Density 1,9 Density 8 Core (1939) Ring 1: 1959 Ring 2: 1979 Ring 3: Later Suburban Cost Research ILL INFORMED & DISINGENUOUS if the urban policies were not so ill informed and presented in such a disingenuous way, there would not be a need for this contribution to the debate on Australia s s cities - Patrick Troy (The( Perils of Urban Consolidation). NOT SINCE COPERNICUS has the conventional wisdom been so wrong. no imperative has been demonstrated. Public Transport: Hopeless Rhetoric Not enough people going to the same place at the same time Don Valley Parkway & Commuter Rail Toronto Public Transport Work Trip Share IMPORTANT TO CBD, A SMALL PART OF THE MARKET Sydney Area Employment Outside 87% CBD 13% CBD: Work Trip Share Autos 9 Public Transport 7 Elsewhere: Work Trip Share Public Transport 1 Auto Competitive Public Transport Auto-Competitive Public Transport ONLY TO DOWNTOWN 5

6 Most Employment is not Downtown Auto Competitive Public Transport SYSTEM DESIGNED FOR PORTLAND (8M GRID) Nor West Business Park Baulkam Hills Urban Rail in the USA DEMAND DRIVEN BY AVAILABILITY OF FEDERAL $ Auto Public Transport LOS ANGELES 1 Metro Line 3 Light Rail lines 6 Suburban Lines 8 KM A$13 Billion Public Transport Auto Before Rail: 1989 Latest Data: 23 12% 1 8% 6% 4% 2% -2% Misleading or Doubtful Information FUTILITY OF PUBLIC TRANSPORT INVESTMENTS 22 Goal Since 198 MELBOURNE 23 PLAN Reduction of Auto Market Share in Percentage Points Goal is many times previous record Melbourne Boston Brussels Zurich Portland Urban Density & Transit Competitiveness HIGH INCOME WORLD URBAN AREAS OVER 3,, 35 Population/Square KM CAR COMPATIBLE (LOW DENSITY) TOO DENSE FOR CARS NOT DENSE ENOUGH FOR PUBLIC TRANSPORT PUBLIC TRANSPORT COMPATIBLE (HIGH DENSITY) Hong 5 Sydney Singapore Kong 1, 2, 3, 4, 5, Population (Millions) High or Low Density in Suburbs MAKES NO DIFFERENCE IN PUBLIC TRANSPORT Halle Neustadt, Germany Atlanta Graystanes (Sydney) 6

7 The Bloating Urban Growth Boundary PORTLAND RETREATS RESPONDING TO REALITY 45, 4, 35, 3, 25, 2, 15, 1, 5, Portland Urban Growth Boundary: Acres 1997 Actual 24 Plan Adopted 1997 Actual Trend to Portland Housing Prices Up Most 199-2: HOUSING MULTIPLE (US CENSUS) Other Urban Consolidation Climb Downs Minneapolis-St. Paul New Jersey Maryland Washington DC Suburbs Australia: Melbourne LA PRV WDC RSB SAC NY DFW BOS SAN SD VB PHI TSP SF ORL NO HOU MIA SJ BAL STL PHX LV ATL SEA CHI MSP KC PGH CIN COL IPS CLV MIL DEN DET POR Australian Dream Brisbane Every Society Has Rich Households Luxury Condos Near Rocinda Favela Rio de Janeiro Background: Democratising Prosperity What Distinguishes Societies is the Extent of Poverty Overwhelming Reality Rocinda Favela Rio de Janeiro $4, $35, $3, $25, History of the World is the History of Poverty GDP-PPP Per Capita 199$A (OECD) United States Australia Japan $2, $15, $1, $5, $ Western Europe US Poverty Threshold

8 Home Ownership and Prosperity Japanese Dream Sapporo 95% 9 85% 8 75% 7 65% 55% 5 Discontinuous Axis GDP/Capita: % 72% 78% Purchasing Power Parity 8 8 Australia UK USA France Sweden Japan 95% 9 85% 8 75% 7 65% 55% 5 Discontinuous Axis GDP/Capita: 23 76% 75% 73% Purchasing Power Parity 78% 73% Australia UK USA France Sweden Japan STRENGTH OF THE LIBERAL ECONOMIES Competitive intensity Examples: Less restrictive land regulation Retailing $12 Competitive Intensity HOME BUILDING: AUSTRALIA & EUROPE (199S) Houses: A Principal Share of Wealth ABS: 1996 $1 $8 $6 $1 $75 Household 17% Home 43% $4 $2 $ Germany Australia Savings 12% Other 21% Securities 8% 8

9 Democratisation of Prosperity: Associated with Personal Mobility 5 45 Real Per Capita 4 GDP/Household 35 3 Autos per 25 Household Democratisation of Prosperity is Associated with Urban Growth United States Growth x1,, Urban Rural Australian Dream Brisbane Democratization of Prosperity is Associated with Suburbanization Canada United States Canada from 1951, US from 195 Others from 1965 Western Europe Japan Australasia Democratisation of Prosperity: Associated with Rising Home Ownership 9 8 Renters Home Owners Threatening the Dream BASIC ECONOMIC PRINCIPLE SCARCITY & RATIONING TEND TO RAISE PRICES Rationing land for housing development tends to raise house prices. Higher housing prices lead to lower rates of home ownership. our evidence suggests that zoning and other land use controls play the dominant role in making housing expensive. In much of the country, new housing units still are abundant and housing prices remain low. In contrast, new construction has plummeted and housing prices have soared in a small, but increasing number of places. These changes do not appear to be the result of a declining availability of land, but rather are the result of a changing regulatory regime HARVARD STATE OF THE NATION S HOUSING 25 Development constraints drive up land and construction costs as well as prevent new housing from keeping pace with rising demand. 9

10 WACHOVIA BANK We have identified three major factors which have worked to restrain supply over the past decade, all of which remain very much alive and well today. The first is the spread of the Smart Growth, Slow Growth and No Growth movements throughout the country. Land Rationing Raises Housing Prices REAL HOUSING PRICES IN THE UK & EUROPE United Kingdom (Strong Land Rationing) EU Outside UK (Little land rationing) LAND USE REGULATION RETARDS ECONOMIC GROWTH metropolitan areas with stringent development regulations generate less employment growth than expected given their Industrial bases AN ALARM ON PLANNING IN THE UNITED KINGDOM The nightmare scenario for the British economy could be that a tipping point was reached where the financial services industry of the city decamps to cheaper cities elsewhere in Europe. International Housing Affordability Ratings And Rankings Housing Affordability: US Urban Areas 2 CENSUS House Value: Household Income Multiple: 2 Census 2 Land Rationing 1 Kiwi Dream Auckland More Affordable SAN HOU DFW PGH STL KC TSP IPS PHI ORL VB CIN CPS ATL BAL DET COL PHX CLV NO MIL WD LV RSB CHI MIA PRV SAC DEN POR SEA BOS NY SD LA SJ SF 1

11 Housing Cost Multiple: 24 AUSTRALIA, NZ, CANADA & USA: OVER 1M METRO AREAS Median House Price/ Median Household Income Fast Growing & Affordable Atlanta Dallas-Fort Worth Houston Land Rationing Raises Land Prices 5 TIMES INCREASE IN S.E. ENGLAND Land Price: 9 Hectare Farm Southeast England (Leunig, LSE) Myth of the 2 Year Land Supply 2. Land Rationing 5. BUF RCH STL IPS PGH DFW SAN KC OKC ATL AUS LVL SLC HOU COL OTT NVL CGY MON MEM NO RDU PHX PHI MSP VB POR ORL TSP TOR MIL DEN BAL CHI SEA BOS VAN WD PER SAC LV AUK BRS ADL MEL NYC MIA SF SYD SD LA Development Not Permitted Development Permitted Housing Affordability Crisis in Australia EXAMPLE OF SYDNEY Higher Prices Encourage Speculation Sydney: Median House Price GDP per Capita (AUS) House Price Multiple: 24 TALE OF TWO CITIES: SYDNEY AND ATLANTA Low Interest Rates Both Urban Areas 2.6 Atlanta 8.8 Sydney The Democratisation of Prosperity is Not Complete Home Owners Renters Land Rationing: Toward a Nation of Renters: Restoring Inheritance as the Deciding Factor Renters Home Owners 7 4 Eventual Rates Based Upon Housing Price Multiples 15% Australia Now Adelaide Rate Sydney Rate 11

12 STRONG ECONOMIC GROWTH: IS NECESSARY But Smart Growth: constitutes an assault on the economy. Canadian Dream Toronto THERE IS NO REASON TO STOP DEMOCRATISING PROSPERITY STRONGER ECONOMIC GROWTH REQUIRED Living in the Future Tense THE UNIVERSALITY OF ASPIRATION Australian Dream HAS BECOME THE GREAT UNIVERSAL DREAM Valencia (Spain) Suburbs Romanian Dream Bucharest PLANNING REFORM: Back to Basics: Universal Dream VISITING THE NEW HOUSE IN BARCELONA People s Route Paris Suburbs Planner s Route Not telling people how to live Rather, helping people live as they prefer 12