Our regional plan won’t end well.

Early versions of regional plans adopted by State Governments in the late 1990s to early 2000s were full of promise. Notable among these for its unbridled exuberance was the community consultation document for the “Draft Metropolitan Strategy for Sydney to 2031” which promised (on the cover no less): “A home I can afford. Great transport connections. More jobs closer to where I live. Shorter commutes. The right type of home for my family. A park for the kids. Local schools, shops and hospitals. Liveable neighbourhoods.” 

A more succinct shopping list of failed ambition would be hard to find. 

Regional plans for metro regions were created around the same time and were built on similar assumptions. The late eminent town planner Tony Powell AO lamented that the Melbourne 2020 plan was “superficial to the point of ridiculousness.”   “The proposition in the latest crop of metropolitan strategy plans that 50% or more of future housing development can be accommodated in existing suburban areas of the major cities is patently ridiculous. These are simply unexamined and unreliable hypotheses, not strategies ,” he said.

The precursor to the first of the Queensland regional plans was “SEQ 2001” a growth management project of the 1990s. By 2005 we had The South East Queensland Regional Plan 2005-2026 which included a foreword by then Premier Beattie, Minister Mackenroth and Lord Mayor Newman: 

“There exists an adage, ‘if you fail to plan, then you plan to fail’. Whilst many of us will have heard this, it is easily forgotten and often overlooked. The South East Queensland Regional Plan 2005-2026 will not be forgotten and will never be overlooked.”

It wasn’t forgotten and instead quickly updated with a regional plan for 2009-2031 under Premier Anna Bligh, Minister Stirling Hinchliffe and Campbell Newman (still as Lord Mayor). This one claimed that “As Australia’s fastest-growing state, Queensland needs a contemporary system of planning that is responsive to change and continues to deliver the lifestyle for which we are famous.”

“It’s a plan for smart growth, to manage our expanding population and tackle the issues of today like housing affordability, congestion and climate change. To manage growth, the regional plan promotes compact settlement by consolidating growth in existing areas which are close to public transport, to encourage reduced car use and help fight congestion. The SEQ Regional Plan ensures there is adequate land available for new homes, businesses and infrastructure to 2031, while safeguarding more than 85 per cent of the region from inappropriate urban development.”

Noble aims but few achieved. In some cases, the opposite. 

Now, over a quarter of century after the early ‘SEQ2001’ we are operating under the latest version: “Shaping SEQ 2023.”  It’s fair to ask what’s changed in response to the passage of time and major societal, industry and technological change. For context, the very first I-Phone was released in 2007. A lot has changed since then, except for some of the philosophical tenets of our regional plan. 

 ‘Shaping SEQ’ is the latest version of the regional plan for SEQ. But given massive social, economic, demographic and technological change are the underlying assumptions out of date?

In fairness, the latest incarnation of our regional plan was never intended as a fundamental rethink, only an update: the presumption being that the underlying principals were sound but fine tuning was needed. 

The terminology has certainly changed. From ‘compact settlement’ in the 2000s we moved to ‘missing middle’ and now ‘gentle density.’ But they generally mean the same thing: contained geographic growth via a growth boundary within which growth will happen, meaning in turn higher forms of density given reducing availability of land suited to - but not permissible for - development. 

But consider the market signals now screaming at us: a severe shortage of housing; tent  villages; worsening affordability (now some of the worst in the world); longer and more costly commutes to places of work, education or healthcare; lengthy hospital wait lists and ambulance ramping; worsening metro wide congestion; rising school shortages; questions around future water and energy supply; a construction industry incapable of responding to the pace of rising demand; record high construction costs; shortages of seniors care; shortages of child care; a planning system where obtaining the paperwork for a project approval can take longer than actually building the thing… it’s quite the list. 

Population growth is one factor rendering the assumptions in these plans now redundant. Australian population growth in the early 2000s was just 1% to 1.5%. It’s now over 2.5%. In raw numbers, growth (mainly due to the Federal Government’s immigration policies) has risen to 624,000 last year compared with around 230,000 in the early 2000s.  That’s a massive increase, never envisaged by regional plan authors. 

Rapid growth in demand requires rapid increases in supply – something we are failing miserably at, across multiple fronts. Not only has minimal extra land been ‘zoned’ for urban expansion  (growth boundaries remain largely unchanged) but our regulatory systems are now less fluid and less responsive. It now takes longer to gain approval from authorities for development, and the costs are also higher. Land capable of development is harder to find, and when you do find it, developers can face several years of pre-lodgement and assessment before a decision is made to allow or deny it. If allowed, it then needs to be built. 

Add to this the increasing reliance in our regional plan for higher density to accommodate growth. The realities of today’s construction market are such that the higher the density, the higher the cost. A two-bedroom apartment needs to sell for over $1million for it to be worth doing after all taxes, codes and compliance costs are added to the land and construction cost. Hence we are now mainly only building density for millionaires. The construction outlook is more benign in that further rapid increases are less likely, but prices are unlikely to fall. Building density will remain the more expensive housing form, and arguably also one that takes longer. 

60% of new housing is now expected to be a form of attached housing. Some 20% is expected to be high rise - clearly a fantasy given today’s reality – while nearly a third is expected to be above 4 storeys (medium and high rise). Is this even remotely realistic?

So our regional plan favours a form of housing that takes longer and costs more. In the midst of a torrent of demand thanks to accelerated immigration in times of a housing shortage, this is a very poor fit. Some will argue that outward expansion is more costly than infill (higher density in established areas) but that argument – while popular in its day – no longer stands up to scrutiny. The infrastructure upgrades associated with more people in existing areas – whether that is waste water treatment, road upgrades, more schools, hospital expansions, potable water supplies – is increasingly more costly than if it were built from scratch in new urban areas. (Cue howls of protest from the usual suspects). 

The regional plan is also not strong on recognising the massive changes in industry, employment and technology since earlier versions were authored. The plan is mostly intended for housing a future population. When it comes to jobs, infrastructure and transport, it - like its predecessors - is weak. Yet where the future jobs will be, and what people will be doing for work, and how they access things like schools, hospitals and other forms of social infrastructure – along with the infrastructure to enable those connections – ought to be a starting point for a regional plan. Start with these things, and plan housing around it. Are we doing the reverse?

The mismatch between where population growth is expected and where jobs are expected is a significant failing of the regional plan. Expecting future residents of Moreton, Logan, and Ipswich for example to commute elsewhere for work is setting us up for a future commuting nightmare. 

Regional planning is essential to give governments and the community a sense of future direction. The expectations now placed on these plans are different because no one could have envisaged things like the rapid increase in migration (except the Federal Government which enabled it) nor the fundamental shifts in the costs of delivering construction – be that housing or infrastructure, among other seismic changes over the years. But things have changed, irrevocably. The pressure points are increasingly obvious.

It's not just time for a new plan, but time to rethink all the underlying assumptions. We need planners, engineers, economists, demographers, builders, the developers and the community to put their very best minds together to find a new way of thinking about the future we want in our region. Times have changed. Time we moved with them. 

Low quality homes & the housing crisis.

Young family outside starter home in Levittown, USA, 1950.

 

If the objective of dealing with the housing crisis is simply to try get as many people into homes they can afford in the shortest amount of time, then “business as usual” will not get us there. The BAU approach is now mostly working for the upper end of the market and at significantly lower volumes than we’ve done in the past. So entangled has it become with building codes, regulations, housing taxes and planning ideology that our ability to produce affordable housing is now limited to just talking about it. Doing it is beyond us.

We need “un-usual” approaches. That could include allowing builders and developers to produce ‘low quality’ housing which sails beneath the plethora of green star energy, ESD, disabled access, trunk infrastructure and other standards which have piece by piece made entry level housing needlessly expensive. It also needs new approaches to the funding and design of infrastructure – from road standards to waste water.  Hence it isn’t being done. Instead, even so-called “affordable” housing is billed as “high quality” – with all the trimmings and a price tag to match. The entry level price for a new lowset 3 bed home – the cheapest housing we can now build (forget about apartments for affordability) – is now around $600,000 in many of the outer suburban housing estates.

The median household income in Queensland is now around $100,000. For new housing to be truly affordable for younger families (who may sit below the median income level) you ideally want to aim for product at no more than around 4 times incomes. That means somewhere between $300,000 and $400,000 for a young family that hasn’t yet reached median income levels.

Can this be done?

I believe it can, but it requires such a wholesale change of policy that I wonder if we have the resolve? Apart from the inevitable cacophony of voices from the regulators or industry professionals in design, planning and engineering who will argue that the standards they so vociferously protect are ‘essential’ (they’re not, besides try explaining that to someone living in a tent) – you will then have to wade through the screeching hypocrisy of the media, academic and political class who will decry lower standards for housing when at the same time pleading for more affordable options - all from the safety of their well appointed inner urban enclaves.

But it’s been done before. In post-war United States, tens of thousands of families sought to flee crowded, polluted, crime-ridden inner cities (all pre-gentrification of the urban environment) for a new life in suburbs, liberated by the motor car. Builder-developers Levitt & Sons developed new suburban estates with mass produced housing which was backed by the Federal Government and which offered low-quality (“basic’) housing of under 100m2 area with no garage or other features. It was massively popular with young families and massively derided by urbanists like Lewis Mumford who complained of  “…a multitude of uniform and unidentifiable houses, lined up inflexibly, at uniform distances, on uniform roads, in a treeless communal waste, inhabited by people of the same class, the same income, the same age group, witnessing the same television performances, eating the same tasteless prefabricated foods, from the same freezers, conforming in every respect to a common mold.” Mumford lived in a large home in a semi rural setting and his wife famously drove him everywhere. He was the 1946 equivalent of today’s privileged elitist. Not much has changed has it?

The lesson of the Levitts was that to deliver affordability, business as usual was not the solution. What was a radical approach at the time put tens of thousands of people into housing they could not otherwise afford.

The other lesson is that ‘starter homes’ are by definition just that. There’s no stopping the willingness or proclivity of homeowners wanting to add to and enhance their home over time. Garages were added. Extra rooms added, landscapes added and in time Levittown grew into a mature community as appealing as any other. Rather than build it all in at the start (with the price tag to match) it was added to over time, either through weekend endeavours or when budgets and incomes allowed.

In the midst of a housing crisis the extent of which we haven’t seen in more than a generation, why aren’t we doing something similar now? If we simply set aside the plethora of regulations, design codes and other instruments, how sharply priced could a new starter home really be?

This is unlikely to happen on a region wide basis: the voices of professional dissent would simply be too loud and would drown out the much quieter voices of young homebuyer families on a budget. But it could happen on a pilot project basis. Find me a site of 100 or 200 hectares just outside the urban footprint (so it hasn’t been already bid up due to artificially induced scarcity) and let me have a crack.

How might it look? First, you start scraping back cost layers. Only last year, the previous Queensland Government added $40,000 in costs via new Construction Code standards and a reported sweetheart deal with the Electrical Trades Union. You could start by winding that back. You could also replace upfront infrastructure taxes with a type of local area utility bond to finance essential (but not gold plated) civil infrastructure, repaid over time via the rates bill or similar instrument. There’s another $35,000 or so saved. Then there’s things like allowing large scale off-grid wastewater treatment rather than costly and sequenced connections to the grid. Big savings there. NBN? How about every home instead gets a Starlink deal? Way cheaper. Then there’s the actual dwelling design. No garages, lower ceiling heights, one toilet, basic kitchen. Designs that envisage future additions and renovations but leave this to people in their own good time. It’ll happen.

Sites removed from existing urban connections can be connected by a free but limited bus service, if required, to connect people to social infrastructure or workplaces. Alternatively, fund this as a shared service via the local area utility district mechanism. In reality, most people have cars and cars are much cheaper to afford than housing in established urban areas where public transport options are more widely available. This may offend anti-car urbanistas who think that cycling to work via manicured cycle ways on $10,000 carbon fibre pushies is the way of the future, but for young families looking for starter homes, that’s the reality.  

This isn’t fantasy and is all entirely possible. They’re doing very similar things in third world nations like Nigeria or India. “But we are NOT third world” I hear the indignant urbanists shout. Really? We have people living in tents and young families barely managing to get by given the globally high cost of our housing. Is that the sign of an evolved, advanced economy? Or a sign or policy and market failure?

Business as usual policy settings have failed us. Business as usual will not rescue us. Maybe history can.

Low cost housing in Nigeria. “… a multitude of uniform and unidentifiable houses, lined up inflexibly, at uniform distances, on uniform roads, in a treeless communal waste” is maybe the pill we need to swallow?

Modular, pre-fab, manufactured or built on site. Very basic but also very affordable housing is possible, but will we allow it?

Queensland Housing Commission house, Chermside, 1958.  Have we totally forgotten how to deliver basic entry level affordable housing at scale?

Levittown aerial – as it was in the 1950s. Also provided were community swimming pools, parks and basic recreation areas.

 

Levittown today. Generations of home improvements and civic investment have made this once entry level starter home development a mature community.

Housing crisis: more of the same in 2025?

 You have to wonder about some (not all) of our nation’s political leaders. They express heartfelt concerns about “the housing crisis” and clasp their hands preaching affordability at every media opportunity they can find. But at the same time, they quietly bring on new taxes or regulatory costs which ONLY impact the new housing sector – the very one favoured by young families getting started in life. Or they spruik urban policies which they claim will address the problem but which almost anyone who has ever laid a brick in their life will tell them simply do not work. Some (also not all) of the bureaucrats they employ likewise mouth the words ‘housing crisis’ but in terms of doing much about it, it’s business as usual. No pressing sense of urgency, or of time running out. Little evident willingness to explore radical policy change. No burning thirst to listen to what the people who work in this market are telling them, or to recognise that the very policy morass they manage is the cause of the worsening situation.

Weeks become months and months become years in this real-life version of the Utopia TV series.

It's hard to be upbeat about the outlook when, for example, just before the Queensland state election, the Miles Government introduced changes to union agreements with Energy Queensland which - according to media reports - will add $10,000 to the cost of a new home. That was after earlier in the year signing off on changes to national construction codes which added an estimated $30,000 to the cost of a new home for environmental efficiency and disabled access enhancements. Remember, this ONLY applies to new homes. For it to have any real impact, it would need to apply to ALL housing no matter when it was built. But that would be political suicide. Much better to bury an additional cost in the price of a new home. Who’s going to know? They get their moment in front of the cameras trying to look good for activists and marginal seats, and new homebuyers get another shit sandwich.

Do the sums on what that extra $40,000 added to the cost structure of a new home did for a young homebuyer’s mortgage. It equates to another $317 per month. All those young homebuyers looking hopefully for an interest rate cut should understand that if rates fell by a full percent from 6.5% to 5.5% (highly unlikely) they will only save what the former Queensland Government added quietly to the cost of their mortgage on their new home.

Neither is it encouraging to hear the comment by Federal Housing Minister Clare O’Neill: "We're not trying to bring down house prices," she told ABC's Triple J in December. "That may be the view of young people, [but] it's not the view of our government," she said.

For a further look behind the curtains for the current Federal Government’s attitude to housing, look no further than the Minister for Emergency Management and Cities. Yep, they lumped cities and emergency management together. Wow. That department last year released a “National Urban Policy: A vision for the sustainable growth of our cities and suburbs.” It’s over 40 pages of nice graphics and a meaningless word salad of motherhood statements, cobbled together without economic rigour or much understanding of what has driven the market to this point. If you can get more than a few pages into it without several eye rolls, you’ve done better than me. Have try – the link is here: https://www.infrastructure.gov.au/sites/default/files/documents/national-urban-policy.pdf Thank you Canberra, your ability to demonstrate how oblivious you are to the real world never ceases to amaze.

In Victoria – where they seem intent on wrecking the entire economy to bring house prices down – they’ve announced plans for 50 “activity centres” of high-density housing in and around train and tram stations. “Building more homes around 50 inner-suburban train stations means young people have more opportunity to rent or buy a place that’s directly connected to public transport,” the Victorian Premier Jacinta Allen said in October.

Which is laudable except for one inescapable problem: high density equals high cost. This is the most expensive form of housing you can build. Pinning your hopes on density-led housing affordability is a fantasy. A two-bed apartment now needs to sell for maybe $1.2 million or more for a project to be viable. Only high-end apartment projects stack up financially. As Max Shiffman, CEO of Melbourne based developers Intrapac said at the time: “Apartments would be great if they were an inexpensive housing product. But they are not - and nothing proposed will reduce the prices to a point where they become attractive and attainable to the broader housing market.” That is hardly going to help the young people the Victorian Premier claims this policy is going to help.

In fairness, the Victorians have been more amenable than some other states to allowing and approving new lower cost suburban development, but on the other hand their approach to taxing the property sector (which includes housing) is eroding margins and confidence. Investors are reportedly abandoning the Victorian market with 22,000 fewer rental properties in the last financial year – battle scarred by high land taxes and rental market policies which are imbalanced in favour of tenants.

The Sydney-Melbourne rivalry means an idea in one place must be matched in the other. Often the squabble is only about whose idea it was first. So the NSW Government late last year announced a new scheme to boost housing in and around transit nodes. The move was headlined by the ABC as: “Higher towers, smaller homes, fewer car spaces recommended to solve NSW housing crisis.”  How appealing. Was the ABC being sarcastic? The aim is to deliver 170,000 “well-located, well-designed and well-built homes” but there’s little insight into how this will happen.

Ironically, while there is good logic to support development around transit nodes, the evidence says this can be even harder than developing density away from transit. I made the observation last year that “rail authorities tend to have their own views about how much development should take place next to their rail lines. They don’t want residents moving into these new developments then complaining about noise, dust or vibrations. They can prove obstructive if their approval is required for development to proceed.”  Plus, like elsewhere in the country, density now equals dollars, and many more of them. It has become an upscale product and it’s hard to see how this will change.

Presiding over this mess of unhelpful policy, regulatory tangles and taxes is Prime Minister Anthony Albanese. His contribution? Despite saying when in Opposition that he wanted a “mature debate” on population growth, he has instead flooded the country with record levels of immigration which has seen latest population growth exceed 552,000 people in one year – the most ever and well above historic trends. It seems it’s no longer a subject he wants to debate.

To accelerate population growth via immigration (which is a deliberate policy decision, not an accident) at a time of housing shortages might seem reckless. But that’s OK – he has a plan - an “ambitious” target of building 1.2 million more houses over five years. That equates to 240,000 new dwellings each year. We are currently delivering nowhere near that level and only got close, briefly, back in 2017 when a massive surge in apartment projects took supply to 223,600 new dwellings. Many have observed the legacy of this 2017 boom are many thousands of poorly designed shoebox apartments with no cross ventilation, balconies, or other design amenity but instead “riddled with flammable cladding, structural defects, and leaks.” Remember Sydney’s Opal Tower?

These two charts from the team at Macrobusiness succinctly describe why more pain most probably lies ahead. I wish I am proven woefully wrong, but I cannot see how either affordability will improve or the housing shortage turn to abundance without some very fundamental changes of policy direction – both of the demand and supply side. Are we even ready for that, or will the situation need to deteriorate even further before we are?