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Thread: If we can just... wait... long enough... the problem will go away...

  1. #1
    Cyburbian Rewey's avatar
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    If we can just... wait... long enough... the problem will go away...

    Hey all,

    There's been a lot of talk in Australia lately (as I imagine there has been in other countries) about Urban Growth Boundaries, and the way they influence housing affordability. It's the old supply/demand curve - limit supply of land, and the price goes up. However, in order to meet urban consolidation and infill targets, it's also a very effective way of ensuring that existing urban areas are utilised for future growth.

    For some time now there have been cries from many sectors to scrap urban consolidation and allow fringe development due to the housing affordability crisis. Housing prices in most Australian capital cities has jumped from the equivalent of 3 times the annual household salary to around 8 times. While this solution seems simple enough, the State governments refuse to budge.

    Now, whilst I understand why urban consolidation is important, I found this quote from the Residential Development Council today...

    From around the year 2020, the mortality of ageing baby boomers will push the rate of natural population growth into the negative: from this point, only immigration will maintain population growth in Australia.
    Do you think the reason for the State governments' reluctance to permit fringe growth is simply because they're waiting for the baby boomers to start dying off, thus reducing housing demand and seeing prices drop? Also, given that the vast majority of negatively-geared rental properties in Australia are owned by baby boomers, there will be a general surplus of housing stock in inner-city areas available?

    The skeptical part of me is starting to think that restricting urban growth and ignoring the housing affordability crisis has NOTHING to do with environmental impact, resource allocation, infrastructure development or the like, and everything to do with with the State governments praying that the oldies start dropping off the perch in the next few years, thereby easing the housing demand. If we just... wait... long... enough... the problem will fix itself...

  2. #2
    Cyburbian Random Traffic Guy's avatar
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    Are the governments going to limit immigration enough to cause an actual population stabilization or decline? Recent experience would say no, either in Europe or the US, despite occasional grassroots uprisings advocating strong controls. I am not familiar with Australian policies, but I seem to recall worries of Chinese and other south Asian immigration? When governments see their money flows going down (whether direct taxes or property tax decreases), the gates would be thrown open in an instant, using ponzi scheme rationale for maintaining payments from workers to oldsters, etc.

    Anyways, baby boomers are not that large a group that it would cause a big change, especially with life expectancy and "live-on-your-own-expectancy" both increasing, spreading out the end of their homeowning days. General demographic decline in developed countries and responses to it are the bigger issue and have been widely noted recently (Italy, Japan, etc), and it will be interesting to see the differences in response by culture (immigration, robots, respectively).

    RTG, immigrant to US, but not reproducing either.

  3. #3
    Cyburbian wahday's avatar
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    The benefits of urban consolidation amount to more than just environmental concerns. There are a great many economic and other efficiencies to be gained from denser urban centers. And, perhaps most significant in our current age, as we transition to a different and more diversified approach to energy production, the hidden costs of living on the fringe may trump lower housing costs. If you have to commute far and the costs of that commute adds another $500 or so dollars to your annual household budget, is that not the equivalent of $500 or so more on your mortgage? That's how the argument goes, anyway. And I would not underestimate the impact on road maintenance costs, infrastructure costs, building schools, fire stations, the people to employ them and the ensuing pollution from commuters.

    As for UGBs driving up housing costs, its not as clear cut as you may imagine. Portland Oregon's UGB requires that they reserve enough land within the boundary to accomodate 20 years of housing and commercial growth. This plan (and the location of the line ) is modified every 5 years. And, yes, the line does move - its not hard and fast. So, the city goes out of its way ensure that there is an ample supply of developable land to accommodate anticipated population growth. Supply and demand should therefore not be impacted as they have ensured there is plenty of land (supply) for future growth (demand).

    Also, there were two tit-for-tat studies not long ago looking at housing values in Portland. The first (which, I believe, was funded by realtor and homebuilding associations) suggested that it had raised housing costs and was therefore a bad idea. A counter study suggested that the first study failed to consider additional factors outside of the UGB that were increasing house values (one, for example, was that at the time the UGB was established, Portland experienced a real economic boom and that many homeowners were reinvesting in the urban core, buying homes and improving them themselves with sweat equity - investing money from the economic boom into improving existing homes).

    This second study also pointed to the tremendous improvement in government services within the UGB for things like fire, water, transportation, and general infrastructure (water lines, street repairs, etc.) The argument was that money that would have been spent expanding these services to the fringe was instead invested in improving the functioning of the existing urban footprint.

    I think that Portland provides a nice example in part because, in contrast to cities like New York, its really not THAT dense. Most of the housing stock is still detached single family and not rowhouses. Yes, the lots may be small, but its still pretty bucolic compared to super dense environments. Its a very nice city, IMO (no I don't live there...)

    Lastly, with the growing concerns over local food supplies (food security), many cities are concerned with maintaining "greenbelts" or similar stashes of agricultural land around the urban core. The UGBs in Oregon came out of an early and, at the time, unprecedented collaboration between environmentalists and agricultural producers for this very reason. Indeed, the US system of agricultural subsidies emerged in part after WWII as a way to ensure that agricultural land would not be developed but reserved for farming. It was all about food security - we pay farmers to continue cultivating land because it may be needed in the future (even if the product they produce now has no appreciable market value). Perhaps not the best approach, but my point is that local food security for urban centers has been a point of concern for some time.
    The purpose of life is a life of purpose

  4. #4
    Cyburbian Rewey's avatar
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    It's interesting when you say the baby-boomer are not that large a group.

    Here's a population pyramid of the Australian population:

    http://www.nationmaster.com/country/as/Age_distribution

    If you look at the pyramids for 2010, and compare them with the predicted population for 2050, you see the population definitely tapering off. This is part of why the Australian government is desperate for people to fund their own retirement, as the population characteristics make a government-funded old age pension a very expensive prospect!

  5. #5
    Cyburbian wahday's avatar
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    You might want to take another look at those population pyramids. In 2025 they are representing population in the thousands and then in 2050 it jumps to millions. So, even though the pyramid appears to shrink, the overall population is continuing to increase. When you have a phenomenon like baby boomers, remember that they, too, are having children, so you are unlikely to see a dramatic drop in population unless they are only replacing themselves or having single child (or no child) households. And then there is immigration.

    These pyramids represent Australian population growth in millions for 2025 and 2050 and gives a different visual impression: http://www.census.gov/cgi-bin/ipc/id...out=s&ymax=250

    Your population is definitely expected to grow through and past 2056. This is from the Australian immigration department:

    Based on the following series of assumptions about Australia's future fertility, life expectancy and net overseas migration, Australia's population is projected by the Australian Bureau of Statistics (ABS) to grow to between 30.9 million and 42.5 million in 2056. Under the ABS medium (Series B) assumptions, Australia's population would increase from 35.5 million in 2056 to 44.7 million in 2101.
    The rest of this population growth fact sheet can be seen here: http://www.immi.gov.au/media/fact-sh...population.htm

    From all of this, I would definitely expect housing demand to continue increasing, so I don't see why the government would be trying to curtail fringe growth in the expectation of a massive dying off of baby boomers. Immigration and domestic population growth are expected by the government to continue increasing.

    My opinion is that issues like water scarcity, agricultural land preservation, the cost of infrastructure, utilities and services are probably driving this move more than anything. I expect Australia's local municipalities are in a similar situation as the US' - shrinking budgets that strap their ability to meet demands on maintenance and growth. In developing a business plan, they need to encourage a model that is manageable and not one that will send them into the black.
    The purpose of life is a life of purpose

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