How to solve housing (un)affordability - Part 1 - Legalise "The Missing Middle"
How to solve housing (un)affordability - Part 1 - Legalise "The Missing Middle"
Our cities need more housing that is both affordable and improves how our cities function, while also offering a lifestyle that is actually attractive to Australians.
It seems I am incapable of brevity, so this article is part one of what will be a three-part series of proposals entitled “How to solve housing (un)affordability”.
Everything in this article is intended as a response to the problems identified in my last article, Australian housing culture is incompatible with rapid urbanisation. So if you haven't read it yet, please go and do that now. Some proposals came out a fair bit spicier than I intended them to be when I started this exercise, so you really need to understand how I think about these problems, in order to not get mad and call me a communist in the comments (I am not a communist).
Legalise “The Missing Middle”
Our cities need more housing that is that is both affordable and improves how our cities function, while also offering a lifestyle that is actually attractive to Australians.
In real terms, this means we want less investment pouring into existing housing and more redevelopment of existing housing, building more of "The Missing Middle".
The Missing Middle refers to types of housing that are higher density than a standard suburban house, but are lower density than say, a 4-storey apartment building. Familiar examples include townhouses, duplexes, walkup units etc.
When it’s at its best, The Missing Middle creates a preferable level of density for how cities function, in that it allows many, many more people to live close to public transport, community infrastructure and major employment centres.
The Missing Middle is also a nice halfway point between urban areas and the suburbs that has the added benefit of not locking millions of lower-income people out of the inner suburbs. They can come with many of the perks of owning a house. If you want, townhouses can have 7 bedrooms, a yard, a garage, storage and privacy. Missing Middle neighbourhoods also don’t feel as urban and claustrophobic as being surrounded by apartment buildings sometimes can.
This "middle" is indeed missing from our inner cities because of layer upon layer of poorly-considered policies and overpowered NIMBYism - effectively making it illegal to build where it's most-needed.
Townhouses? Yuck! No thanks.
I know, I know. Most townhouses in Australia are gross - but they don’t have to be!
If the goal is accommodating rapid urbanisation, the industry needs to demonstrate that we can produce Missing Middle housing that is actually attractive to Australians to entice them away from the 800 square metre block.
Making matters worse, the majority of Australian developers don't seem capable of producing townhouses that aren't a miraculous combination of somehow being both ugly beyond belief and low build quality. So I am by no means saying we need more of the same.
I can certainly sympathise with those who object to townhouses for aesthetic reasons. But this is again a uniquely-Australian problem. Europe consistently demonstrates the ability to deliver beautiful and affordable Missing Middle housing that offers a real lifestyle alternative to suburbia.
Townhouses can even be ultra-luxurious if you build them that way - after all, Satan-himself, Jeffrey Epstein lived in a townhouse. Do you really think you’re richer than Epstein on your 800 square meter suburban block?
Abolish Single Family Zoning in inner and middle suburbs
This is the most important one - and that's why it's near the top.
Straight out the gate I want to make sure I’m being clear - nobody is talking about banning detached single family homes. If you want a classic suburban house, there are millions for you to choose from. If you have one, nobody’s going to make you sell it.
Please sir, put down the gun.
Abolishing Single Family Zoning in inner and middle suburbs just means legalising Missing Middle housing, where currently, only classic suburban housing is allowed. So abolishing Single Family Zoning would just mean that you don’t have the right to stop somebody else from building townhouses.
Over time, this would allow many, many more people to own homes in the most desirable neighbourhoods of Australian cities and live closer to where they work.
Sounds downright dystopic? Widely-known totalitarian nightmares such as Portland and Sacramento in the U.S. have recently awoken "YIMBY Consciousness” and legalised Missing Middle housing, through abolishing Single Family Zoning. They proved that it’s actually possible to get an otherwise-disinterested public to become politically-engaged over something as bland and unsexy as housing policy. Bravo.
Remove or reduce car parking minimums
Ever wondered why European cities seem to have an endless amount of nice-looking townhouses and high streets? It’s very simple: they were built in the magical time:
BC: Before Cars.
Ever heard the saying form follows function? In reality, form follows parking.
I cannot tell you how many times in my career that parking regulations have killed a project. Indeed it seems like no matter what you are designing, whether it’s an apartment complex, a university campus or an airport, one thing can be guaranteed - parking will suck up an inordinate amount of the oxygen in the room.
This is one of the reasons why the inner suburbs of Australian cities are typically made up of either ultra-expensive single family housing or multi-storey apartment blocks, and nothing in between. The regulatory environment makes Missing Middle housing struggle to stack up financially, partially due to high rates of parking required by local governments.
I propose that in areas close to high frequency public transport, we simply let developers choose how much parking they want to supply. It might be more, it might be less. They understand their customers better than anyone and they won’t make money if they put together an undesirable offer.
Let home buyers tell developers how much parking they need, rather than having arbitrary rates imposed from above by local councils.
Stop indulging NIMBYs
As a society, we need to make a decision. What’s more important? Is it:
a) The rights of millions of people to access reasonably-priced housing, a reasonable distance from where they work; or,
b) The rights of those that are better-positioned politically and economically, to use the state apparatus to enrich themselves at the expense of others - or as they would put it, "Protecting their communities".
Hyperbole aside, the fact remains that when you give communities the power to reject new development - surprise, surprise - they reject new development. At the city scale, this is disastrous.
Contrary to the popular expectation of this "right" that we grant to communities, property rights do not actually extend beyond your property. The right of NIMBYs to make bad-faith objections to a townhouse development, kilometres away from their house is a particularly-destructive brand of insanity that is incompatible with rapid urbanisation.
I’m aware how authoritarian this sounds to the uninitiated, but I am again in no way talking about infringing on property rights. This is just to say that inner and middle city communities need to be disabused of the expectation that they have the right for nothing to ever change. Controversy!
It works in Japan
Despite the country's dwindling birth rate, Tokyo is currently experiencing a population boom and subsequent rapid urbanisation. Some of the trendier inner neighbourhoods like Minato-ku have grown by almost 100,000 residents in two decades, yet housing prices have remained relatively stable. How they achieved this was simple - they approved hundreds of thousands of new dwellings every year. (Stay tuned for Part 2 - Build. More. Housing.)
Under the Japanese system, if a Tokyo landowner wants to knock down their house and replace it with a set of townhouses, there’s little that the neighbours can do to stop it.
I am aware that my career has given me warped perceptions and priorities, so this may sound like a dystopian nightmare to some - but if you're trying to keep housing costs under control, this actually works.
Local politicians are compromised by bad incentives
"It is difficult to get a man to understand something when his salary depends upon his not understanding it.” - Some Guy.
Given the incentives in place, local politicians cannot be expected to engage with these issues in good faith. To name a particularly egregious example, Brisbane's semi-recent ban on townhouses is up there with the most Machiavellian, regressive and short-sighted political calculations in the city's history. However, it perfectly illustrates the destructive incentives that local politicians are vulnerable to - bad urban policy can help you get elected.
Put yourself in their shoes. Why would you take on the futile cause of engaging with NIMBYs and special interest groups who were never open to persuasion to begin with - when you can always fall back on the flaccid cop-out that you were merely “representing the interests of your constituents”.
Don’t hate the player, hate the game.
Go above their heads
This is to say that waiting for the day when local politicians will advocate for the best long term, sustainable outcomes for our cities is a fool’s errand.
State and Federal Government institutions that (at least theoretically) aren't beholden to wealthy inner city communities need to play a more active role in enabling and delivering good development.
In Japan, they set their housing policy at the national level, so local concerns about a new townhouse development five streets away has to compete with every other national election issue.
Now compare that with local politics in Australia, where NIMBYs and special interest groups can exert outsized influence over their local member to yield policy outcomes that benefit the financially-established few.
Attach the right strings to big infrastructure projects
Without setting Australian housing policy at the state or federal level (and I’m not saying we should), there are some quick and easy moves they could make that would help the situation.
When State and Federal governments provide funding for new major public transport infrastructure projects (like a new metro line), the money should come with strings attached that require the relevant local councils to legalise The Missing Middle in areas close to new stations. So when we are delivering the new major veins and arteries of our cities, these projects are able to have maximum impact in setting cities up for better affordability.
Out of everything I’ve talked about here, I think this is the most achievable.
Affordable housing policies don't work
The jury has been back on this for a while now; so-called "inclusionary" zoning policies generally don't work. Zoning and restrictive planning frameworks are themselves, part of the problem. Similarly, rent control policies have been unilaterally proven to be a disaster and providing developers with convoluted, Byzantine incentive structures to build affordable housing like density bonuses or tax incentives has been shown to have a negligible impact.
Why? When governments require developers to provide an amount of affordable housing units, this drives up the total cost of the project. In response, developers don’t just throw up their hands and say “aw shucks, I guess I’ll just make less money”, no - they pass on the costs to the rest of their customers, raising the total cost of housing and pricing out the middle class.
It’s great for the scant few who are lucky enough to get a below-market-rate apartment, but at the macro scale, it does more harm than good.
Stay tuned for Part 2 - Build. More. Housing.
Where all of this is ultimately leading is that best way to improve housing affordability is to build a lot more housing. And not just Missing Middle housing as described above. More of everything.
Right now, we are not meeting demand in a way that corresponds with the kind of population growth Australian cities are experiencing. Some studies estimate that Australia will need to increase the number of homes it builds each year from 2018 to 2050 by 20%, just to avoid compounding the existing affordability issues we already face.
So my next ham-fisted musings will focus on increasing the total quantity of housing being built. Low-cost, market rate and luxury - more of everything.
Please reach out if you know of good ways to do this that you want me to mention.
I'm listening.
UPDATE
Part 2 of this article series: How to solve housing un(affordability) - Part 2 - Build. More. Housing” is now posted.
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Hi Riley, I'm enjoying your housing articles. There is some "spice" that's for sure. Here's a quote from a reply I posted on LinkedIn recently --- "The very, very hard truth is that there was a community, city, village, built form before you arrived. And that where you live now was once different from today and it will change again whether you like it or not. To this end, what you value today may not have been valued by previous generations and may not be valued by future generations." --- We urgently need many of the changes you are writing about if we are to have quality cities that are liveable and affordable. In Brisbane in particular, where like you, I also work in planning and development, there is a vital need to change policies around multiple residential, parking and character protections, to name just a few. One specific example is that we need a townhouse or "plexes" development code/s instead of the one multiple dwelling code that attempts to paint all multiple res development in the City with the same brush. It's ridiculous.
As appealing as the free market solution is, in the inner suburbs we also need to restrict the development of huge apartment complexes comprised of tiny apartments. The missing middle needs to develop more dense housing that can accommodate the average Australian family.