Sunday, November 28, 2010

Housing bubble? No but, yeah but …

Talk of a housing bubble and an imminent collapse of Australia house prices gathered steam recently with reports of a senior Treasury official sounding the alarm on house prices as ‘the elephant in the room.’ (Read the story here). So is there a bubble, and if there is, will it burst or slowly leak? And what’s likely to happen next year?

Our media tend to focus on extremes – so balanced reports of what’s happening in the housing market are hard to find. Better to give exposure to doomsayers like Steven Keen (the Professor who predicted a 40% fall in prices, remember him?), or boosters like the many real estate agents or investment advisors, trying to pry money from your hands. A Treasury official may sound like an impartial judge of economic events but don’t worry too much about what one official may have to say – they’re notoriously inefficient in predicting economic outcomes. When’s the last time you heard of a government getting its budget forecasts even close to right?

That said, there are widening views about house prices in Australia and the banking system’s high dependence on a stable housing market makes this a deadly serious subject. The question of a ‘bubble’ presumes a risk of imminent collapse, which would mean economic calamity for many recent buyers without the equity buffer to ride it out, along with much of the economy.

So are prices too high, and if they are, do we risk a rapid fall? Yes, and no – in that order (and in my opinion).

The question of house prices hinges on people’s capacity to pay. Even with latest data showing the average wage has reached $65,000 per annum, median prices around $450,000 are still high – being around seven times average incomes. New entrants to the market find it especially hard, given their incomes are typically lower than average. Two income families are now the norm out of necessity, but even then, the combined household income is under pressure to fund a home at the lower end of the market (say high $300s). New product isn’t generally available for much under $400k – so gone are the days of moving out to the urban fringe to buy cheap.

Pressure on peoples’ capacity to pay is also being exerted via other means – rising utility charges (especially electricity, and now water), motor vehicle registrations, day care costs (a reality for the two income family) and so on. That’s why small movements in interest rates, adding $50 a month to mortgages, are hurting many. With all that in mind, it’s hard to see how prices can rise any further without substantial wages growth, and if that happened, the RBA would cool the growth by raising rates further, cancelling out the increased capacity to pay. Turn it whichever way you like, further rises in prices in the next several years are hard to foresee.

A further point on the RBA is their concern that rising prices, in the absence of new supply, would be a worrying trend. And that’s exactly what happened in the past couple of years – prices rose, and new house starts fell. Glenn Stevens, Chief of the Reserve Bank, warned of this over a year ago:

“A very real challenge in the near term is the following: how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices. Given the circumstances – the economy moving to a position of less than full employment, with labour shortages lessening and reduced pressure on prices for raw material inputs – this ought to be the time when we can add to the dwelling stock without a major run‑up in prices. If we fail to do that – if all we end up with is higher prices and not many more dwellings – then it will be very disappointing, indeed quite disturbing. Not only would it confirm that there are serious supply-side impediments to producing one of the things that previous generations of Australians have taken for granted, namely affordable shelter, it would also pose elevated risks of problems of over‑leverage and asset price deflation down the track.”

(You can read my article last year dealing with why Glenn Stevens was right to be worried about the housing market by clicking here).

So if we assume prices are now at a peak, what’s the risk of a rapid fall? Still pretty minimal I suspect, for a number of reasons.

The cost of new supply is one factor supporting a floor in prices. Developers would be releasing more stock to the market now if they thought the market was there. But the prices needed for new stock are determined by a range of underlying inputs – the high cost of raw land approved for development; the time cost of development assessment; the cost of taxes levies and charges; and the actual build cost the structure. This means the cost of new supply can’t fall (unless developers start selling at a loss). That new supply is around the mid to high $300s for apartments in Brisbane, and probably closer to $400k for a house/land package in a new estate. (Victoria’s new housing market is noticeably cheaper and their politicians are debating moves to make it even more so through cuts to stamp duty. A shame we don’t see that in Queensland).

New supply is also slowing, so there isn’t a big surplus of new stock floating around. Developers won’t sell for a loss and buyers can’t afford (or don’t want to) pay the necessary price for new product, so it isn’t being created. Plus, population growth – once an engine room of growth for the Queensland economy – is slowing, fast. Net interstate migration is falling fast, so we’ve become reliant on breeders and overseas migration for our growth numbers. That’s growth with a different demand profile to what we’ve been used to. So the demand isn’t there as it used to be, and neither is the supply.

Investors have reportedly been keeping the market alive but they will realise that the concept of negative gearing relies on capital growth for the sums to stack up. If prices are at or near their peak, it could be a long wait for capital growth to compensate for the yield losses on mortgaged rental stock. But unless investors are quickly forced to sell, there’s little likelihood of a flood of investment stock hitting the market.

Slower sales rates are already making themselves felt however, and vendor expectations are confronting buyer sentiment, which means prices are being dropped to meet the market. This will have to show up in median price data soon enough, but the percentages won’t be the calamity predicted by bubble theorists because as soon as reported median prices fall, bargain hunters will create a new floor of support. There are always plenty of punters who can’t say no to a perceived bargain.

Further to that, employment promises to remain strong. I remember the media laughing at claims (not so long ago) that unemployment would fall to 5%. Well, in the midst of the GFC, it’s barely moved from there. Provided people have incomes, and provided the cost of living doesn’t get further out of control, and provided interest rates don’t hit double digits, there won’t be that many people in a ‘forced to sell’ situation which would create the imbalance of supply and demand needed for a ‘bubble’ to burst.

The more likely scenario is not a burst but a slow leak. If next year we start to see median prices falling, the media will latch onto that and headlines will scream ‘collapse’ but in reality, a fall of even 10% will only being prices back to their 2008/2009 levels. Not good news if you’ve recently lashed out on a big mortgage and bought the most expensive house you could possibly afford, but those people are a minority in the market. (Media reports will of course focus exclusively on that minority).

Confidence will not be high if the media turns gloomy on all things housing, but perhaps it’s the breather the market needs? We can’t really sustain further increases in prices unless we are willing to consign an entire generation to non home ownership. Higher income households will unlikely be affected, and investors who bought more than three or four years ago will still find the increased rental incomes over that period sufficient reason to hold. There’ll no doubt be some movement in the median price figures, but it’s also quite probable those figures will be based on much smaller volumes of activity.

None of which is especially exciting for 2011, and possibly also 2012. Maybe real estate will for a time stop being the BBQ stopper it’s become, and we’ll see fewer shows on TV about how to make fast money on housing, and fewer spruikers occupying column centres in the press, talking up the future prospects of housing as a ‘make money’ proposition, as opposed to being somewhere to live.

Market stability doesn’t generate headlines, and once you stop reading daily or weekly reports about the housing market, or when TV shows like ‘The Block’ have faded into a memory, it could then be the time to dive back in. But that time may be a while away yet.

Tuesday, November 9, 2010


At a time when construction starts are falling across the spectrum from commercial to retail, industrial and housing, and construction industry jobs are going with them, you’d think the very people holding a key to a resurrection of fortunes might be lauded. But no, developers continue to suffer a poor public image. Why, and can it ever be improved?

The Reserve Bank’s recent move to increase interest rates was not well received by the development and construction industry. Housing and non-residential approvals are in a general slide and when the industry represents such a cornerstone of the economy, this might logically be a time when policy levers are applied to turning around the problem. A widely reported lack of new supply in housing is compounded by private sector commercial development at a virtual standstill, development finance the most widely cited culprit. According to the UDIA, construction industry jobs are down by around 25,000 in Queensland. That’s a lot of incomes not being spent in the economy.

Developers as a group though aren’t exactly being courted by policy makers or regulators, looking for a way out of the problem. Quite the opposite – politicians still regularly throw the mud at the very industry which holds a key to improving housing supply and construction industry jobs. “I won’t stand by and let greedy developers get away with … blah blah blah.” You’ve all heard it before. Denial, pass the buck and shoot the messenger continue to be preferred defensive tactics of politicians responding to industry complaints of excessive regulation. Labeling all developers “greedy developers” has about as much validity as suggesting all politicians are corrupt simply because a handful break the law, but the latter (politicians) continue to target the former (developers) - and get away with it.

It’s not just the politicians of course. Many regulators and planners, if you believe the horror stories, have taken an adversarial stance to development assessment whereby the applicant (the developer) is regarded with suspicion from the outset. The regulators don’t see themselves as facilitators of new activity but as ‘growth managers’ exercising every precautionary principle known in a bid to slow, curtail, check and re-check the consequences (real or imagined) of a proposal.

Then there’s community opinion, which puts developers and real estate agents and used car dealers into the same category. Development proposals that align with local or state planning schemes, and which may have already jumped through several hoops before a public airing, are often widely rejected via the pages of the local press. This isn’t just NIMBYism, because the target of hostile public complaint isn’t the planning scheme or the local or state politician who endorsed it, but the developer applicant who is simply complying with the scheme’s intent. Irrespective of how green, how sustainable, how rational or how much needed the proposal may be in community or economic terms, it’s the developer who gets the bad press.

Why is it that developers just can’t win?

I’ll venture a theory that many readers of this won’t like. Developers are too meek, too obsequious, too prepared to be thrashed with a wet lettuce and succumb. With rare exceptions (Stockland’s Matthew Quinn is one) developers rarely comment publicly about the problems imposed on the industry by excessive and growing regulatory burdens. The allegations of land banking, of profiteering, greed, opportunism, social irresponsibility and environmental vandalism are, it seems to me, infrequently challenged in the public domain.

Some of the reason for that no doubt lies in the politicisation of development assessment: development is no longer an exercise in market and land economics, but a political game. Political intervention in planning schemes and the ability to kybosh proposals means that developers need to be acutely sensitive to their position. Throwing back the facts and arguing the case publicly may not win political friends, and developers certainly don’t need any more political enemies. But what that means is that as more mud is thrown, more mud sticks.

It’s true that industry groups have their role to play in advocating development industry positions and promoting the benefits the industry brings, and by and large do a good job with the resources available. But is it also true that developers themselves tend to hide behind their industry groups in a sort of ‘good guy, bad guy’ act where industry group executives are left to do the sledging while developers do the schmoozing?

I recall a meeting with a Government Minister some years ago, dealing with a mounting problem in the Minister’s Department which threatened to cost the industry dearly. The meeting was civil but the issues weren’t danced around – “a full and frank discussion” might be its best description. The Minister was getting the message, loud and clear. But then, at the close of the meeting, the developer representative left the Minister with the comment that “Minister, thanks for your time and we want you to know you’re doing a great job.” Bang, pop – the pressure was instantly deflated. That Minister no doubt reported to their colleagues that the industry was pretty put off but didn’t present a political problem.

So if asking individual developers to publicly challenge the mud being thrown at them and defend themselves more aggressively is akin to asking them to paint a target on their forehead saying ‘shoot me’, is any sort of group industry response to a poor public reputation possible?

A clue might lie with the farmers. Faced with a problem where farmers (thanks to aggressive environmental politics) were copping all the bad press for tree clearing and land erosion to fertiliser and herbicide runoff, while the community somehow was allowed to forget that without farmers we don’t eat, they responded. The ‘Every Family Needs a Farmer’ campaign was a defensive community education campaign, designed to build more empathy amongst urban consumers of the issues faced by farming communities. The campaign has run through several incarnations over several years, and was no knee-jerk, one-off exercise.

Now if Dick Smith can fund a TV documentary and anti-growth campaign single handed, you’d think the entire development industry could manage something in its own interests? Especially when those interests are closely aligned to the interests of the community. I don’t see this as a hard sell, but it is a story that needs selling. You wouldn’t call it ‘Every Family Needs a Developer’ but you could start with a few things that the community as a whole seems to have forgotten:

Almost every street and the houses in it, in every neighborhood, is the result of a developer at some stage taking a risk.

Every shop in every high street, and every shopping mall your family visits, is the result of some developer at some stage, taking a risk.

Almost every workplace, whether it’s a medical centre, a factory, or an office building, is the result at some stage of a developer taking a risk.

Increasingly, many of the schools, roads and community facilities that we enjoy are funded through the activity of developers.

The homes we will need so that people aren’t sleeping on the streets won’t be provided by governments, or politicians, but by developers. The economy that we need to feed our families and support our aged and infirm, relies heavily on developers and the construction jobs that flow from them.

Many developers go broke trying, and in doing so, they lose their own money, not public money. It’s a high risk venture where certainty is essential. It’s not an industry where the public sector has ever shown much of a track record – witness the billions squandered on public housing programs which produce very few roofs.

Developers have legitimate concerns about the cost of doing business. It means their costs to the consumer – in the form of houses young people can’t afford, or rents that businesses struggle to pay, are higher than they need to be. It’s not developers making this happen – it’s regulation.

At the end of the day, developers can sit back and wait for more mud to be thrown, or begin to defend their reputation, and to defend the need for growth.

Is there anything to be lost by trying?

Thursday, October 7, 2010

Top gear it ain’t.

The decision by the Queensland Government to take planning control of Stockland’s massive Caloundra South development away from the Sunshine Coast Council, prompted a predictable retort from the Local Council. In the process, it brings into perspective the competing tensions between various planning authorities and regulators. Those tensions are getting worse, and none of it is doing anything to reduce red tape, improve decision making, speed up supply and reduce housing costs.

The decision on Caloundra South was controversial not so much because it was called in by the State Government, but because it was handed over to the Urban Land Development Authority, a group labeled by Brisbane Lord Mayor Campbell Newman as “unelected, unaccountable and busily pushing the planning policies of unelected state government bureaucrats on local communities.” (Read the story here). That’s pretty much spot on, though he could have added some equally derisive comments about the ballooning budget of the ULDA and its staff, and questioned why we need a State Planning Department at all, if it is considered so inept at getting anything done that its role is being increasingly usurped by the ULDA.

In fact, why bother with Local Government Planning roles at all, if the ULDA or the State think themselves the only ones competent to assess significant development applications or consider substantial issues of local and regional planning? No doubt that’s the view of the Council of Mayors in South East Queensland, who have loudly objected to the decision on Caloundra South and the increasingly significant role being taken by the ULDA.

The State Government counters by arguing that projects like Caloundra South have been in the planning ‘in tray’ of local government for far too long. A slowing supply of developable land and escalating infrastructure costs are problems laid directly at the door of local government by the state. Caloundra South has been subject to planning assessment and debate within Sunshine Coast Council for around 5 years already, with not a single roof yet to show for it.

The Federal Government buys into the fray by arguing that both State Governments and Local Governments must act on reducing red tape to accelerate the supply of land, but the Feds seem content to play the role of commentator, rather than enforcer.

The Reserve Bank buys into the debate by frequently noting its concerns that artificially restrained land supply and excessive development fees seem to be increasing the cost of a reduced supply of land, in the face of constant demand. Hence, they regard this policy inertia as placing in effect inflationary pressures on housing prices.

So the jurisdictional squabbles worsen and the criticisms mount with no clear end in sight. If you’re in any way a fan of motorsport, a simple analogy might explain the frustrations that housing providers are facing.

Neutral. The engine’s revving and you’re chewing through petrol but you’re not going anywhere. You’ve got an application in with your local authority, and a multitude of various referral agencies. Each begins a long process of assessment, questioning, suggesting, and quite possibly public debate. Be prepared for some overheating as you won’t have any airflow for quite some time.

First gear. You’re off the grid and underway. The engine’s revving its head off, chewing through even more juice, but you’re not going anywhere fast. Your application by now is quite possibly considerably altered from when you first submitted it. While you thought you were submitting a proposal in compliance with the planning regulations, you didn’t factor in the flexibility of those regulations. But at least you’ve now got something you hope will tick the various boxes and will hopefully get approved by the relevant authority.

Second gear. After a few laps in first, you find your project identified by the State Government as something they may ‘call in’ because it is potentially state significant. In the case of one recent residential tower, this could simply mean 300 units in a single apartment complex are deemed ‘state significant’. You’re hopeful though – anything is better than doing laps in first gear, your motor will burn out if you keep that up.

Third gear. Your project doesn’t get called in by the state, it gets flicked to the ULDA as an approval agency. This promises the potential of faster speeds, but you’ll have to return to the grid for a bit, stick it in neutral for a spell as an entirely new agency assesses the proposal and makes a series of fresh recommendations. But you’re told to be prepared to run through the gears again quickly once the flag drops.

Fourth and fifth – the top gears. These gears are available but you’re not allowed to use them. Rumours of the ‘old days’ abound though, when development approvals could be obtained from a single agency inside a month, and headworks charges were reasonable and directly related to the project in question. Entire suburban communities were created this way, housing was affordable relative to incomes, and you knew who was in charge. You reminisce with senior industry players, listening with envy to their stories of completing multiple projects in a single year. You’re struggling to complete one project in several years.

Reverse. The Planning and Environment Court can slam you into reverse faster than you thought possible. This might simply be because a competing project identifies some regulatory idiosyncrasy that allows them to appeal your approval. Advocates of a free market in planning terms quickly turn into protectionists when faced with competition from another project. Or, you could find yourself at the mercy of the EPA who find evidence of koala droppings on your site. Your pleas that they’re in fact feral rabbit droppings don’t get you anywhere, because by now the local paper is giving massive airtime to an environmental lobby who are calling you a greedy developer and an environmental vandal.

Meanwhile, construction starts continue to fall, further choking supply. If we keep this up, we’ll soon be a mirror image of NSW where housing starts are at a 50 year low and problems of affordability chronic and widespread. The other mounting problem is that what’s being widely called a two or three speed planning approvals process now seems officially endorsed: local councils are frequently at odds with the state planning department and then off to the side sits the ULDA working to another set of rules altogether. The word ‘integrated’ has it seems been banished from planning altogether. And ‘consistency’ as a principle went with it - as one eminent planner raised with me, “if the ULDA approves Caloundra South with reduced infrastructure charges, what happens to all those other poor developers on the Sunshine Coast left at the mercy of the Council and their higher charging regime? What about a level playing field on charges? What will happen to fair competition under those circumstances?”

They might be stuck in first gear, while someone else running the same race is lapping them in third, while another got slammed into reverse. Fair it isn’t, and top gear it ain’t.

Monday, September 27, 2010

Is Queensland’s tourism brand banal?

Queensland tourism has a ‘new branding strategy’. But is there anything ‘new’ about it? Or is it a collection of the same banal clichés which we’ve been serving up for decades?

This week, the Premier released what was billed as ‘a new branding strategy’ for tourism in Queensland. You can find one report here, and the Youtube video of the latest tourism TV ad for the state is here.

According to the Premier, the new strategy has been worked on for a year by the brains trust of Tourism Queensland. It will be backed by an initial $4million social media campaign. Gone is the ‘Where Else But Queensland’ campaign line, to be replaced by ‘Queensland, Where Australia Shines.’

Hmmm. At a time when tourism operators and destinations are reporting diminished interest from domestic travelers (many lured overseas by the strong dollar, or simply looking for different experiences to the same old same old) and international tourist arrivals have slowed, you might have thought a ‘new brand strategy’ would be something quite different. But this isn’t.

Have a close look at the launch TVC commercial mentioned above. It’s a cascading series of beautiful images but they’re typically all featuring the same thing: beaches, ocean, water and sunshine. Have a close look. There’s a rainforest scene, and Brisbane gets a look in with a scene of people paddling up the Brisbane river in kayaks (as they do, all day. In fact, so popular is this pastime that it’s becoming a menace to navigation. Not!).

So what’s wrong with this? Tourism’s all about buckets and spades, isn’t it? The truth can be something different. Here’s a few things to mull over.

Shopping and dining, along with cultural experiences, usually rate very highly on the recreational travelers list of ‘must dos.’ They also account for much of the actual expenditure by tourists visiting a region for leisure or business (the whole point of calling it an industry, after all. Playing on the beach is free). Shopping, dining or cultural experience don’t feature in the initial ‘Queensland, Where Australia Shines’ campaign, though they may come later. You would hope so, or it could make the mistake that allegedly happened with the famous ‘You’ll Never Never Know’ campaign for the Northern Territory. Evidently, while the ad was very appealing, the fact that the campaign almost exclusively featured remote outback locations turned off a number of potential travelers, because they thought the NT was devoid of decent hotels, shops, or restaurants. So that audience never never knew because they never never went.

The other weakness of this obsession with white sandy beaches and blue waters, tropical skies and bright young things frolicking in the water, is that you can find the same experiences all over the world. For the same money, would you have a family holiday in Fiji, or the Whitsundays? Many domestic tourists have already worked that equation out for themselves. Plus, the new Queensland campaign seems preoccupied with youth. Maybe not a bad thing, but higher end mature or family travelers with solid holiday budgets to spend probably don’t plan on the sorts of ‘young, active and single’ activities profiled in the campaign.

In fact, it doesn’t look like there’s a single person in the campaign that’s aged over 30, which makes it look like an effort to turn the entire State of Queensland into a giant Club Meb or Contiki Tour destination.

While I’m on a roll, I just don’t understand why tourism promoters in Queensland insist on reinforcing rusted on images of the state. Since the 1960s, the state has been synonymous with sunshine and beach holidays. Ask anyone elsewhere in Australia the first place that comes to mind when you mention ‘Queensland’ and the answer will be ‘Gold Coast.’ I think they’ve got the message. It’s warmer, there are lots of beaches, palm trees, rainforest and reef. Because these are so synomous with Queensland, surely you don’t even need to advertise them? Mainstream media and culture does that for us - they’ve become a cultural fixation. Talk about stating the bleeding obvious.

The shame here is that the broader recreational offer of Queensland always struggles for a look in. It’s taken some time, but Queensland’s restaurants are now among the best in the country. Our fresh produce is hard to beat, offering regional delicacies which could lure high spending foodies, if only they knew there was more to the place than cold prawns in the hot sun, by the beach. Cultural and non-beach recreational experiences are improving all the time. Think about it this way – plenty of Australians holiday in Victoria. They’re not going there for the weather. But in Queensland, our tourism promoters continue to project a strong statement that Queensland is all about the weather, beaches and little else.

It might surprise many that, last time I checked at least, Brisbane has more visitors and more visitor nights than even the Gold Coast. The capital city is the biggest tourism market in the state, bar none. The reasons are common sense enough – people visiting their friends and relatives, and a very high number of business and convention travelers, along with people who actually want to experience an urban environment. The tragedy for markets like Brisbane is that, when they do feature in promotions of Queensland, they tend to mimic the beach experience, with visions of people frolicking in the artificial lagoon of South Bank, or (as they do in this case) paddling kayaks up the river.

Is this distorted image of Queensland doing harm to the potential of tourism markets which don’t fit the clichéd image of sun, surf and sand? And what about the State’s business reputation – is a one dimensional tourism message about sun surf and sand so powerful and overwhelming that being taken seriously as a place for suits to make money is a battle to overcome prejudices? Instead of swimming with a tide of opportunity, does the tropical image mean that anything not associated with those clichés means swimming against a tide?

Apparently the latest campaign is the result of a great deal of research. But looking at the first campaign offering, all the research may have asked is in essence “what do you think of when we say ‘Queensland’” and responded by feeding existing perceptions. Is there anything so wrong with telling people something they don’t know about Queensland?

Monday, August 30, 2010

Fortress Australia: ground hog day

Roughly ten years ago I penned a series of articles lamenting the sudden lurch to all things rural and the demonisation of urban interests. Pauline Hanson was in full flight and politicians the country over were happy to promise anything to disaffected (largely rural) voters to regain their trust. City slickers were persona non grata. I thought we’d made some gains since then, but the results of the recent federal election are shaping up as ground hog day for urban and regional policy. Only this time, it could be worse.

Two things are shaping in the aftermath of the 2010 Federal Election as portents of things to come for our economy and the future of our urban and regional centres. They are the combination of what seems now to be an orthodox view that Australia is close to reaching its maximum sustainable population, combined with the political tilt to the Bob Katterisms of rural politics. Together, this could mean we are about to usher in an era of low growth, high protection policies. Fortress Australia could easily become a reality no matter which side ultimately claims the keys to The Lodge.

This is in part because prior to the last Federal Election, both sides of politics became suddenly shy of the long term growth patterns of population in Australia. In September 2009, Wayne Swan released some early findings of the Intergenerational Report, which predicted Australia could reach 35 million by 2050. Although this rate of growth was pretty much the same as the preceding 40 years, the figure was greeted with alarm by media, the community, and much of the political herd. ‘Australia Explodes’ went the headlines and the lemmings followed. (See this blog post from a year ago).

A month later, then PM Rudd was proclaiming that he believed in ‘a big Australia’ but by mid 2010 his later nemesis Julia Gillard was proclaiming she ‘did not believe in a big Australia’ and as Prime Minister declared we shouldn’t ‘hurtle’ toward 36 million but instead plan for a ‘sustainable’ population, renaming the Population Minister the Sustainable Population Minister in the process. The word ‘sustainable’ in this context stands for ‘slow down or stop.’

Then came the election campaign with Abbot promising to ‘slash’ the ‘unsustainable’ immigration numbers (that his mentor John Howard had been responsible for) and to ‘turn back the boats.’ Population growth was to be cut to 1.4% (a long term trend) and migrants potentially forced to settle in rural areas (some dodgy form of postcode migration policy).

However you look at it, the message from both Gillard and Abbot was clear: support for a ‘big Australia’ (that being 35 million by 2050 or the same rate of growth we’d seen in the last 40 years) was gone.

Add to that the quixotic entrepreneur Dick Smith and his population documentary ‘The Population Puzzle’ where he alleged Australia was at risk of running out of food, out of space and out of control, comparing us (oddly) with places like Bangladesh. Smith might be mad but you can’t discount the impact he has on Australian popular opinion. People believe him, and plenty more people would be thinking we’re about to be overpopulated as a result of his documentary than before, politicians included.

Could it get any worse for the prospects of maintaining even modest levels of population growth? The last election outcome means the answer is yes. We now have the balance of power in the Senate controlled by The Greens, and in the lower house by a handful of notionally old school National Party independents. The Greens’ view is clear on population growth – they don’t support it (unless you’ve arrived illegally, by boat). "This population boom is not economic wisdom, it is a recipe for planetary exhaustion and great human tragedy” said Bob Brown when the Intergenerational Report was released.

The independents’ views on population are harder to work out, but it would be a fair guess to suggest they would lean toward the Abbot view: turn back the boats, and slow the overall rate of growth. They are quite likely to also push for a redistribution of economic riches to a range of projects for rural and regional areas, which could be fine provided these projects were subject to a rigorous business case (unlike the mooted National Broadband Network and its $40+ billion plan for faster porn, unsupported by any sort of economic analysis). The irony that the election result hinged on big swings in urban seats but that a handful of rural independents are now trying to call the shots shouldn’t be lost on anyone.

Not to be left out, the Local Government Association of Queensland’s annual conference this year will focus on population growth, leaning toward limits on growth unless bountiful riches are showered on local governments to cope with ‘unsustainable’ rates of growth. Association President Paul Bell says “councils cannot let population growth exceed infrastructure needs.”

"Where we find water supplies no longer match the size of the community, where we find roads are congested, where we're seeing other infrastructure whether it be health or education are falling behind," he said, population growth was by implication to blame.

The bottom line? Population growth is now a dirty word and for any business which relies on growth for its prosperity, this is not good news. Everything from airports to property to construction to farming to retailers, manufacturers and tourism will be affected by slowing growth. For Queensland, which no longer relies on interstate migration for its growth, it could be worse: any slowdown in international migration will hit state growth quickly and dramatically. (See here for why).

Even social services could suffer if growth is deliberately slowed by this cabal of anti-growth movements. Why? Because in 50 years time, without migration or natural growth, there may only be two working adults for every five retired. You wouldn’t want to be one of those two and paying their tax bill in 50 years’ time.

How has this come about? The answer is pretty simple: growth itself has never been the problem. Note to Paul Bell and others – it’s been a notoriously inefficient planning approach which has misdirected precious infrastructure spending, which has pushed up housing prices, which has caused frustrations at rising congestion, which has seen hospital wait lists grow and which has been the root cause of much of the community angst about the symptoms of growth where policy not only can’t keep up, but tries to slow everything down. In the last decade, can anyone honestly claim that our planning schemes are now more efficient and quicker, or more easily understood, or better targeted, than a decade ago? I doubt it.

Would it be too much to ask for a sensible, evidence-based approach that ties population growth to urban and regional strategies, which emphasises economic progress while maintaining lifestyle and environmental standards? How about some decent plans to link regional urban centres to major cities, based not on pork barrels to influential independents but based only on the business case and community mutual benefit? Or how about putting the ‘growth’ back into smart growth, with some policies that allow our urban areas to expand in line with demand matched to infrastructure spending, rather than policy dogma?

Those same questions were being asked a decade ago. Welcome to ground hog day.

If you’re interested, here’s a couple of yarns from 10 years ago.

Slicker Cities for City Slickers. October 1999.

Nation Building and a National Urban Strategy. May 2001.

Monday, August 9, 2010

Office market glasses at least half full?

The recent release of the Property Council’s Australian Office Market report was greeted by several media outlets as an opportunity to focus on ‘soaring’ vacancy rates. But what if, for a moment, we focussed instead on the occupancies, not the vacancies? Would that tell a different story?

The office vacancy rate statistic is a pretty straightforward measure of the gap between supply and demand. The Property Council, and most market commentators, have traditionally focussed on the vacancy rate as a barometer of market health. But the vacancy rate can fall in a shrinking market if older, redundant stock is removed from the stock survey for a variety of logical reasons. Equally, the vacancy rate can rise in a healthy market, if additions to supply exceed total new demand.

Another way to look at the health of the office market is to disregard the total vacant space (both direct and sublease) and simply focus on what’s left. That is, what’s really happening to overall demand – the space that’s actually occupied? After all, an excess of new supply can simply reflect bad timing or an over exuberant development market – it doesn’t necessarily mean that demand has weakened dramatically.

An analysis of the Property Council figures on this basis produces a different picture to that painted by the media headlines. What it shows is that total occupied space – or if you like, total demand – has done little more than plateau since it’s peak in January last year. There has been a minor fall in overall demand, of just 150,000 square metres of space, but that’s across the entire country and all the various submarkets covered by the Property Council Survey.

What is just as obvious is that office markets around the country have remained remarkably resilient to the effects of the global financial downtown. If you had believed the Nostradamus-like warnings of impending doom, or followed the share price of any number of listed A-REITS heavy in the office market, you’d be forgiven for thinking there’s been something of a calamity at play. Not so.

If demand had dramatically softened, as some have suggested, you would expect to see a significant fall in total occupied space. A plateau is not a significant fall (unlike global share indices may be used to).

Of course if you’re in the business of leasing new office space in a market which isn’t expanding, that’s another story. But traditionally, vacant space has migrated itself from lower standard buildings to higher standard (ie new) ones. And an interesting thing also then happens (or at least, it has in the past).

As new buildings are added to the stocks of office space, they have rarely over the past 20 years opened fully let. But as they lease up, they do so at new levels of benchmark rents. It stands to reason – new buildings cost more to develop than older ones did, and usually feature higher standards of technological features or sustainability virtues. ‘New’ always comes at a premium to ‘old’ so waves of new building construction have tended to correspond (albeit with a lag) with cyclical spikes in market rentals. And the cost of new construction is not about to fall.

The new buildings command more rent, and those rents are then used as benchmarks for the Grade of building below that, and through the market the ripple flows.

So when new buildings arrive on the market, they obviously add to supply which can tend to bump up vacancies (especially given the ‘lumpy’ nature of new supply in large commercial buildings). But they can also tend to lead rental growth. It is a mistake, or can be, to interpret rising vacancies and stable or falling rents as a sign of weak demand – these things can reflect temporary surplus of supply.

So the short version of all this is that maybe the glass is more than just half full? Total demand for office space hasn’t collapsed or even significantly shrunk, despite the tsunami of economic events endured by global and domestic markets in recent years. Plus, the new additions to supply now coming on stream may just portend the next wave of rental growth in office markets generally, as the economy inevitably improves?

You can read what you like in the daily papers. But believing them is another thing altogether. It’s worth contacting the PCA and buying their Office Market Report, and doing the same analysis yourself for whatever local market interests you. You might just be surprised.

Monday, August 2, 2010

A good decision - but where to from here?

The decision by Brisbane Lord Mayor Campbell Newman to compulsorily (if necessary) acquire a major inner city development site so that it can be used for public open space might have plenty of people in the planning and development industry shaking their heads in disapproval. I won’t be one of them.

Lord Mayor Campbell Newman’s bold move to purchase the disused Milton Tennis Centre site in inner city Brisbane for public parkland has been welcomed by a host of so called NIMBY groups in the area, who opposed high density development. The 3.5 hectare site had been acquired by a prominent developer and had existing planning approval for a range of development to around seven storeys in height. The developer was in the process of seeking planning approval to increase the development density to closer to 20 storeys in height, for the tallest towers. That proposal was generally consistent with the stated intentions of the State Government’s infill strategy under their regional plan, which sought to deliver much greater density throughout the Brisbane area, especially for sites close to transit infrastructure (as is the Milton site).

But the scale of development proposed did not sit well with local residents. Community opposition in the area was widespread – it was the talk of the supermarket aisles on the weekends and school pickup zones during the week. An active NIMBY group campaigned aggressively against more high density development in the area and they’ll be congratulating themselves on a win right about now.

But the decision goes deeper than simple local community opposition, however vociferous. It highlights some of the inevitable conflicts of a State imposed regional plan which mandates higher density, and a community which hasn’t bought the talk. The decision, I think, was a good one for this local area, given the scale of development which will take place in and around the Milton area in years to come. It signaled that the Mayor is acutely aware that higher densities will mean more pressure on open space. And it also signaled that there is still a place for democracy in public policy, as opposed to the imposition by elites of mandated policy dogma.

On the flip side, it reinforces the legitimacy of political intervention in planning matters. In this instance, a Mayor made a good decision, in the community interest. But other politicians have notably made some very poor interventionist decisions, and not always in the community’s best interest.

The decision also exposes the failures of the density advocates to win public support for their case. This is ultimately the highest test for public policy in a democratic system. The alternative is a Soviet style system where elites dictate direction without reference to the will of the people (or without reference to basic fundamentals of economics, or of market demand).

But perhaps most of all, the decision throws into question a range of issues which have yet to resolved, except for the ‘pro’ and ‘anti’ rhetoric of the protagonists. Clarity, and community agreement are, it seems, a long way off. Consider the following:

· The Milton Tennis site is only 500 metres away from ‘The Milton’ high rise residential tower, by another developer. This tower has been approved for 30 storeys, after being ‘called in’ by the State Government Planning Minister as a ‘matter of state significance.’ Ironically, the existing town plan for the area permits less than 20 storeys, but a draft neighborhood plan by the Council would have allowed 20 storeys. It’s now approved for 30, because the proponent succeeded in convincing the State Government that this was something of great importance to the state. Will other high density proposals required to meet the density targets of a regional plan be equally important, and receive the same treatment?

· Part of that argument no doubt rested on the need for at least some ‘Transit Oriented Developments’ to see the light of day. A decade of discussion has achieved precious little, which would be an embarrassment to the succession of plans and planning reviews which have hailed TODs as the urban planning equivalent of a second coming. Having faith is one thing, but there’s a desperate need for TOD advocates to attend at least one ribbon cutting ceremony, at some stage, to vindicate themselves. ‘The Milton’ looks like it will be ‘the chosen One.’

· Anyone who thought that actual planning permission for a particular site could be found in a local town planning document would be mightily confused. The 30 storey Milton tower gets an OK despite community objection and a planning scheme which provides much reduced height restriction, while 500 metres away a site with existing approval for around 7 storeys gets the opposite treatment – it’s to be resumed and turned into parkland.

· Proponents of high density living have cited many promised virtues as outcomes. These have included less traffic congestion, a cleaner environment, a more environmentally sustainable approach to urban growth, and the list goes on. But the limited evidence offered in support and the affront to common sense suggested by some of these arguments run counter to community wisdom. Even schoolchildren were smart enough to realise that more people per square kilometre will mean more congestion, more crowding in shopping centre carparks, more crowded buses, and more people wanting to walk dogs or play cricket in parks. So while the planning elites maintained their mantra, the community saw through it and called ‘bull.’ Here is where the density advocates have failed. Until they can support their arguments with hard evidence, and until they can mount convincing arguments that win community support, what they are proposing is in effect anti-democratic.

· The realities of higher density housing will inevitably mean more people, more cars and more congestion, and more demands on open space for inner city and middle ring neighborhoods – not just in Brisbane but everywhere that the density mantra has taken root (which is most Australian capitals). To what extent should community opposition be written off as ‘NIMBYism’ or, alternatively, treated as their democratic right to influence public policy? This alienation of local community opinion from the preferred patterns of urban expansion (or ‘in-spansion’) outlined in most of our urban planning schemes is a real problem. Planning elites cannot expect political leaders to fight a tide of community opposition, unless they have in mind a more determinist political system.

· This problem will only get worse, as more pressure is placed on our urban areas to grow within confined, existing boundaries. As it gets worse, the primacy of planning schemes will be further eroded. Unless some fundamental changes are made to planning schemes, more and more politicians will seek to intervene, case by case and site by site, in planning matters because of community confusion and neighborhood opposition. Given the average standard of an Australian politician, this won’t be a good outcome for the developers, for planners, or for the community at large.

So where’s the resolution to this? Solutions aren’t so hard to identify. Here are a couple of suggestions:

· The backyard may or may not be a ‘right’ but it is considered to be one by a majority of the community. Backyards of detached houses, as a place for children, for pets, for BBQs or family gatherings are important to a wide cross section of people. Density advocates may need to give some serious thought to how high density living will ultimately affect family living, and give serious and open thought to the consequences of their preferred policy approach. The same serious consideration to the management of increased demand for road space and open space would go a long way to answering legitimate community concerns. Just dismissing the concerns or ignoring their legitimacy won’t solve the problem.

· Planning schemes based on a democratic and transparent agreement of future development have a stronger chance of meaning something to all parties. The Brisbane City Council recently announced a ‘virtual’ 3D model of the CBD and inner city, which will ultimately be used as a tool for assessing future proposals. There’s no valid reason and no technological obstacle to such a tool becoming the planning scheme itself. A visual realisation of future planning intent has a better chance of clearly communicating with the community at large. Widely accessible and readily understood equals transparency, not just for the community but also for the industry. The archaic regulatory and legislative nature of current planning instruments, with their convoluted terminology, only serve to confuse and alienate, which leads to distrust.

· Finally, elitism in planning whereby policy decisions are made by a collective of highly placed officials or industry professionals, with only limited reference to evidence of market preferences, to broad community opinion or even to accepted ways of life, can only fail. Democracy has its place in planning. That place should be in first determining an agreed overall strategy, right down to the local implications. Communicate that via a transparent and ‘virtual’ model widely accessible to all, and then leave the plan to do its job.

None of this is new but if we’re to avoid a future of even greater confusion in planning policy, it’s now time the spin of planning reform was replaced with substance.

[Disclaimer: Yes, I’m a resident of the area affected by the Milton plans. No, I didn’t take part in any of the protest activities].

Wednesday, July 14, 2010

Going underground

The State Government last week sought a bit of a fanfare about the possible construction of a new underground heavy rail line below the Brisbane CBD with a new underground station at Albert Street. The infrastructure commitment should be welcomed but before we get too excited, maybe we should first ask ourselves a few questions about the economics of it all?

The idea of new underground heavy rail lines to connect with the commuter rail system of south east Queensland isn’t new. I can even recall some 15 years ago proposing just that in a policy paper for the Property Council, which identified new stations in the CBD as a critical element in making use of rail transit more user friendly. The existing CBD stations, we argued, were barely CBD at all. Roma Street station is well off-centre, and ‘Central’ station is inappropriately named because it is far from ‘central’ to the core of CBD workers, students or regular visitors in modern Brisbane.

The ‘modern’ Brisbane has concentrated its CBD workforce largely on the south eastern side of Queen Street, toward to the river. This large concentration of office and retail workers are prime candidates for public transport. They typically have regular work hours (great for service scheduling) and being concentrated in a CBD location, it works for the ‘hub and spoke’ nature of public transport systems. But the location of the nearest rail station – Central – is just that bit of a stretch in hot or wet weather if it means walking 300 or more metres, up-hill, to get to your train.

So logically a new underground station (or even two) which brings the convenience of commuter rail closer to the office should encourage more people to make use public transport. In terms of improved workplace amenity, the idea has plenty going for it. If you owned office buildings anywhere along the river edge of the Golden Triangle, you’d welcome this initiative with open arms and beg the Government to fast track the proposal.

So it could indeed be a great idea. But there are few unanswered questions about the economics of heavy rail commuter transport which should deserve equally enthusiastic investigation of the evidence.

For starters, we don’t seem to have much of a plan when it comes to the real cost of public transport – especially the City Train network. The latest Government figures show that every trip, by each and every commuter on the City Train network, is now subsidized to the tune of $10. That’s per trip, so for every daily return trip, the taxpayer is forking over $20 per commuter. And that’s after commuters have paid their fare – remember it’s only the subsidy. Worse news is that the numbers of patrons are falling – from 60.7 million to 57 million in a year. (Worth reading the articleTaxpayers' share of rail fares increases, while CityTrain passengers continue to decline” in The Courier Mail, June 15, 2010).

The concern here would be that unless some of the fundamental economics of this failed pricing model are sorted, more commuters may only mean more subsidies and more taxes for the taxpayer. In short, there doesn’t seem to be an economy of scale: if more people caught the train under the present system, it could cost us more in subsidies, not less.

Ironically, an online poll taken in connection with the above story revealed that 79% of respondents (out of 824) claim that train fares are already too high. This is especially ironic for two reasons: commuters with jobs in the CBD market are, on average, paid more than their suburban counterparts; and commuters who use the rail service are increasingly drawn from more affluent inner city and middle ring suburbs. The proportion of public transport users who begin their journey in low income, outer suburbs, is small compared to the increasing proportion of those who find it a handy (as opposed to necessary or low cost) way to get to work.

The evidence for this is found in studies by people such as Dr Paul Rees, School of Global Studies, Social Science & Planning at RMIT, and others. Various studies increasingly point to a rising correlation between rail (and tram in the case of Melbourne) use and proximity to central city workplaces. Put crudely, big chunks of that $10 each way subsidy are being paid for by low and middle income taxpayers with jobs in the suburbs (far from convenient train stations) so higher paid central city workers can have access to a convenient form of transport from their inner city or middle ring home, to work.

As for the mooted new underground rail network, according to the Premier, it is going to service “Toowong, West End, the city, Newstead, Bowen Hills, Bulimba and Hamilton North Shore.” These are hardly what you’d describe as working class neighbourhoods.

A further question needs to be raised about the potential growth in commuter rail traffic, notwithstanding the convenience of a new CBD station. With the exception of the new line to Springfield, there are no new lines being laid and no new stations proposed. The catchment populations around the various train stations that form the City Train network are variously touted as ‘TOD’ (transit friendly development) zones but other than this new denomination, there’s been precious little development activity to show for a decade of discussion.

Even with the best will in the world, simply building more housing around train stations won’t mean more commuters to the CBD because most of the jobs are in the suburbs in the first place. I am unaware of any State Planning Policy which aims to concentrate more office and retail workers in the CBD (indeed the pressure is on to decentralize). And without more workers in the CBD, there are simply not going to be more commuters wanting to go there. So you can have more housing around train stations throughout the metropolitan area but this won’t mean more people working in the city – unless there’s also going to be more jobs in the city (or the mode share rises).

An additional handbrake on increasing patronage of the heavy rail network is that even getting to a suburban train station in order to catch the train isn’t easy. If you live more than a kilometre from a train station (which means the overwhelmingly majority of all residents) you would need to drive your car to a station. But stations have precious little in the way of parking for these commuters, and nearby residents justifiably object to having their streets turned into kerbside carparks for daily rail commuters. This is one of many practical realities holding back increases in mode share of rail as a percentage of all commuter trips. That proportion has remained stubbornly fixed at under 10% of all trips for Brisbane (rail and bus and ferry combined) while for the CBD the mode share sits at some 45% of all commuter trips (bus, rail and ferry combined).

[Finding impartial rail commuter statistics isn’t easy. There are a host of rail proponents and rail agencies and various transport studies designed to promote public transport who in turn churn out all sorts of figures to support their case. Independent, non partisan material is less easy to source].

So while the notion of a new underground rail line with a new CBD station sounds like a terrific idea, you’d hope that those who are responsible for spending our money will be doing some hard numbers on the feasibility. This cross river rail project is mooted to cost something like $8.2 billion dollars in today’s terms. By the time they get around to building it, it will no doubt cost more.

Even if the cross river rail and new station managed to achieve the optimistic result of 100,000 new rail commuters, that still works out to $82,000 per extra commuter. And if those commuters are to continue to be further subsidised to the tune of $10 per trip, each way, every day, this could be the sort of infrastructure initiative which ends up costing the community a great deal.

You’d hope the numbers are being rationally, dispassionately and independently done, and the questions being asked. For example:

  • How many extra rail commuters will the new line and CBD station realistically generate?

  • What extra workforce would be required in the CBD to support a rise in new rail commuters? (100,000 extra rail commuters to the CBD could require, at 15 sq.m per person, 1.5 million square metres of office space, or another 25 Waterfront Place towers. Is this realistic?)

  • What public transport alternatives are available, and how do those costs compare? (The bus system relies on a lower passenger subsidy than rail, plus largely uses existing road infrastructure and routes can be expanded largely without the sort of investment required of rail. What would even a $1billion investment in the bus system do, by comparison?)

Food for thought.

Monday, June 14, 2010

Planning’s cultural cringe?

First it was Portland, Oregon, touted as a poster child for urban planning in Australia. Now, Vancouver, Canada, is climbing the ranks (if you believe some of the wistful commentary doing the rounds). But how useful are these comparisons, and are we seeing another incarnation of Australia’s infamous cultural cringe?

Advocates of higher density and the “brawl against sprawl” in Australia frequently cite overseas cities as model case studies. Portland, Oregon, was for a long time cited as a good example of pro-density housing strategies which sought to limit ‘sprawl’, promote public transport through investment in things like light rail, and promote cycling and a range of other planning ‘solutions’ that would sound remarkably familiar in Australia.

The truth about Portland, however, didn’t match the hype of its city planners. Much of the boosterism focused on the mostly downtown area of Portland. Like Melbourne, or Sydney, this is its own municipality, with its own Mayor and its own planning officials. As they aggressively sold a story about the virtues of their planning strategy for the city core, they omitted the inconvenient broader metropolitan facts as they went.

The story of the real Portland, including the surrounding suburban areas, is different to what these policy promoters would have you believe. Portland today, despite hundreds of millions invested in a new light rail system and the promotion of inner city housing density, has fewer public transport trips as a percentage of total travel than in 1980. Urban Growth Boundaries introduced by Oregon State in the 1970s led to housing price pressures which eventually excluded the middle and working class. Leading US city demographer Joel Kotkin describes it as an ‘elite city’ which is ‘remarkably white, young and childless.’ And as international housing market expert Wendell Cox has pointed out, the suggestion that Portland has much to crow about in terms of urban consolidation doesn’t match the official statistics: with Portland just as guilty of ‘sprawl’ as Los Angeles.

The same can be said of Vancouver. Touted by its city officials as a paragon of virtue in planning policy, the Vancouver story is almost entirely limited to its geographically confined downtown. Here, in the wake of overbuilding of office properties in the downtown core, city officials rezoned excess commercial capacity to permit high density residential housing in what we would call the CBD. This ‘living first’ strategy produced a wave of new residential development which saw the core population grow by 20,000 people to around 60,000, and to potentially 90,000 by 2015. Redundant waterside areas have been coverted into residential precincts, and commuting by public transport, cycling or walking are favoured over private vehicles.

Taken in isolation, the Vancouver story could start to sound convincing. But there are some glaring omissions. The City of Vancouver is home to around 600,000 people. The downtown area – the subject of much of the planning hype – is home to 60,000 people. The broader metro region, based on the same sorts of urban definitions we might use for Brisbane, or Sydney or Melbourne, is home to 2 million people. There is precious little said about the lives of the 1.4 million people who aren’t residents of the City of Vancouver, or the more than 1.9 million who don’t live in the revitalized urban core.

For these Vancouverites, life isn’t a rosy as the planning hype would have you believe. The most glaring omission about life in Vancouver is that it also happens to be one of the world’s least affordable cities in which to live. According to both the Reserve Bank of Canada and Demographia, Vancouver’s housing rates as severely unaffordable, eating up some three quarters of the region’s median pre-tax household incomes. The problem is so chronic that it has prompted an online game “Crack Shack or Mansion” where visitors are asked: “Can you tell the difference between a crack shack and a Vancouver, BC mansion, listed for one or two million dollars?” Play the game yourself by clicking here … it’s an eye opener. [A Crack Shack, for the uninitiated, is a den of inequity where illegal drugs are produced].

That’s hardly the sort of model city you’d want to tout as a planning example we could learn from. The other glaring omission from the planning fairy tale of Vancouver is that life in the city core is vastly different from the overwhelmingly suburban conditions of the vast majority. To the south of Vancouver’s downtown lies an endless suburban grid of detached housing, with limited parklands or open space. Check it out for yourself on Google Maps or Google Earth. Jump into Google Street View and take a walk down a typical Vancouver street. Do that with a housing price list from “Crack Shack or Mansion” in hand and then convince me this is a model for any Australian city.

A final glaring omission is the climate. This from the official Living in Canada website: “Snow depths of greater than 1 cm are seen on about 10 days each year in Vancouver compared with about 65 days in Toronto. Vancouver has one of the wettest and foggiest climates of Canada's cities. At times, in winter, it can seem that the rain will never stop.” Summers aren’t so bad though: for two months of the year, the average daily maximum even exceeds 20’c!

So Vancouver as the next poster child of planning for any Australian city is looking shaky. It’s hopelessly unaffordable (and we have enough problems of our own in that regard), the quality of its majority suburban environment is lower than the standards we already enjoy, and the climate could not be less similar.

The same can be said of other city-regions often described as examples of how Australian cities could develop. Copenhagen, Paris, or Venice have all in their time been selectively extolled as models for Australian urban planning.

Maybe this fascination with irrelevant urban models stems from a form of cultural cringe? Whatever the reason, the analogies can be dangerous – especially when they omit the more essential economic or lifestyle based criteria such as housing affordability, share of economic wealth amongst a city/region’s residents or climate and lifestyle factors.

It might instead be more helpful if Australian planners referring to overseas examples also kept in mind some of these pragmatic metrics. For example, benchmarking cities with more affordable housing markets than ours and with strong local economies where wealth and standards of living are enjoyed across a wide spectrum of society would produce some very different case studies. Factor in similar climate patterns (which largely dictate recreational and lifestyle behavior) to our own and the choice of comparable cities reduces further.

We might even start to find that our own cities offer plenty of examples of ‘getting it right.’ Instead of this cultural groveling we could start to define the things we like most about our own existence and plan ways of replicating that, rather than imposing on our cities forms of existence that, appealing as elements might be, are incapable of replication in the Australian context.