The head of the Financial Stability Department at the Reserve Bank of Australia, Luci Ellis, delivered an excellent speech last week on Space and Stability: Some reflections on the Housing-Finance System. In the speech she observed:
The cumulation of individual decisions and government policies over many years has given us comparatively low-density cities that create large price premiums for the most convenient districts in those cities.
Australia’s low urban population density is clearly seen in the chart above copied and pasted from Luci Ellis’s speech.
One relevant government policy is the protection of heritage houses, such as old Queenslanders. While the excessive protection of heritage houses has only occurred in the last few decades, and urban sprawl had commenced before the restrictions came into place, there is no doubt heritage protection now plays some role in constraining supply and raising prices in older suburbs. My friend and colleague Brad Rogers has previously written on this topic and has just posted a fuller exposition of his views:
I’m sure the RBA would welcome a relaxation of heritage protection by our Councils. As Luci Ellis noted:
I am hopeful that, over time, Australia’s urban structure can evolve to offer better choices and greater financial stability. This might require some changes to the way we plan, build, and live, as well as ongoing prudence in how we borrow.
Currently, heritage protection is a major impediment to the provision of better choices in our older suburbs.