The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, August 24, 2011

Is great Australian dream of 1/4 acre block turning into an apartment? Slowly (charts)

When I first argued in 2003 that reducing Australia's housing costs was all about the 'supply-side stupid'--rejected by the RBA and other too-smart-by-halves at the time but embraced by the RBA (without referencing) and everyone else as the conventional wisdom today--I argued that we needed to migrate the conception of the great Australian dream away from the quarter acre block to a higher density form of tenure (read from page 263 onwards here). As you can see from the two charts below, this is slowly happening. Here is some of what I wrote in 2003:

"The important lesson to be learnt here is simply that our conception of tenure choice has evolved significantly over time, and even today it varies vividly according to the region in which one lives. Households in Beijing, London, New York and Sydney have very different expectations with respect to the category of accommodation they hope to obtain. In the future, our understanding of tenure preference will continue to evolve as population and city growth conflicts with constraints posed by anachronistic transport systems, a finite amount of exploitable land, and regulatory restrictions that hinder the elasticity of supply. However, the flexibility alluded to by history suggests that the prospects for change may be more promising than one might otherwise suppose...

The fact of the matter is that our urban environment is diffuse by overseas standards, even in the larger metropolises such as Sydney. Figure 82 throws some cold water over the combatants’ posturing by ranking the world’s leading cities by number of persons per square kilometre. Sydney, the most concentrated of all our capitals, comes in way down the list at number seventy. Above it one might be surprised to find many acclaimed life-style destinations, including Auckland, Christchurch, Glasgow, Hamilton, Montreal, New Orleans, Ottawa, Paris, Vancouver, San Francisco, Stockholm, and Toronto. So perhaps the key takeaway here is that popular conceptions of tenure choice, and the spatial strategies that arise as a result, will have to evolve to accommodate the changing economic needs of future cohorts of consumers."