11 November 2022

Home Truths: Urban fringes and the untapped 'missing middle' in the suburbs

| Claire Fenwicke
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Woodbury Ridge

Woodbury Ridge is one development popping up as an urban fringe as buyers search for land outside Canberra. Photo: Supplied.

With the ACT Government’s tight grip on Canberra’s land supply, some developers are turning to NSW to provide more housing options for people willing to travel just that bit further.

But are these “urban fringes” the solution to our housing woes?

Woodbury Ridge is a new development in the village of Sutton, just 15 minutes drive to Gungahlin’s town centre and 20 minutes to the city.

It’s a joint venture between Kenyon Services and Capital Plus One, with development team member Andrew Cook saying chronic undersupply of land in Canberra was sending buyers over the border.

“There’s no silver bullet to this problem, but the shortage of greenfill land and at times oversupply of high-density apartments [hasn’t helped],” he said.

“Developments like ours show it’s possible to have land near Canberra and also walk your kids to school, have that rural lifestyle, ultimately at a better price point.”

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A trained economist, Mr Cook said while high-density buildings were more affordable, he felt the incentives hadn’t necessarily been created for people to make them their homes.

“We’re getting the supply, but the demand is not there,” he said.

“Even those apartments in Canberra’s more vibrant areas, you look at the retail on ground level and they’re struggling, people aren’t staying.”

Mr Cook said apartments as an affordable option for first homebuyers was great in theory but, due to oversupply, prices weren’t increasing in a way that allowed people to buy houses as their lives grew.

“It works in reverse as well,” he said. “Boomers are occupying large homes in areas more appropriate for large families but there’s very little incentive for them to downsize.”

One risk with urban fringes was that the infrastructure may not exist, however developers were becoming more aware and were creating amenities that would attract people to the area and increase the value of the land.

In a perfect world, Mr Cook said paying for such infrastructure would be a joint venture between all interested parties.

“We can no longer pass the buck from one to the other and say ‘it’s your problem not mine’,” he said.

“In a perfect world we’d upgrade everything before people move in, but in reality that’s not a fully viable way to do it. So the developer can look into road upgrades and access, but more arterial ones sit with local government.

“Personally I think we all have a vested interest in delivering a good outcome, and finding that balance, because it ultimately benefits not just the developer but the wider community.”

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There’s also another option to help our housing crisis.

Planning Institute of Australia ACT President Trevor Fitzpatrick said Canberra had been following the concept of the “15-minute city” where everything could be accessed within a drive of that length. That’s why places such as Tuggeranong and Belconnen were designed around their own town centres.

But he said there was a land resource we currently weren’t allowed to capitalise on – our own backyards.

“Look around the suburbs, a vast majority of it is just single detached dwellings on big blocks of land … certainly we’d advocate those suburbs can accommodate lots more dwellings,” Mr Fitzpatrick said.

But current planning laws don’t allow unit titling for dual-occupancy on most blocks in suburban residential areas.

“So if you’re a developer, you’d build two [houses on the land] and have to sell them together, and nobody wants to buy two in one,” Mr Fitzpatrick said.

“In the suburbs, which is the old urban fringe if you like, we’ve got mums and dads who’ve got an 800 square metre block who have been mowing the spare 400 sqm for the last 20 years, the kids have left home … they’ve got a land asset there worth hundreds of thousands of dollars.

“If they could [divide the land and build a home] they’re essentially downsizing the exact dwelling they’ve been living in for the past 30 years, because all they did was effectively sell their backyard.”

For those who lamented shrinking backyards, Mr Fitzpatrick pointed out the way we interact with our homes and communities has changed.

“In greenfill, we’re not creating 800 sqm blocks, we’re creating those 400 sqm blocks anyway,” he said.

“Because we’re 30 per cent or more open space in Canberra, you just have to jump out with the neighbours and go down the street rather than play in your backyard.”

He said towns had developed 30 to 40 years ago with the concept that mothers were staying at home with their children, which had shifted in recent times.

Now, instead of meeting up in our homes, people were more inclined to meet up at coffee shops or parks, which negated the need for larger backyards.

This is known as the “missing middle”, which we’ve overlooked as we’ve focused on higher-density housing or moving outwards to have low density housing.

“It’s not just dual occupancies but townhouses and developments around centres where two or three houses could be replaced by half a dozen townhouses,” he said.

READ ALSO Home Truths: Realities of the housing market in a public service town

Mr Fitzpatrick agreed with Mr Cook that the approach to high-density housing also needed to be improved.

“If we’re going to put more people into more confined spaces through higher density, we need to acknowledge the public parks and spaces we’ve currently got need to serve a totally different purpose to when they were first established,” he said.

To pay for further improvements to our inner-city open spaces, he also had a suggestion.

Mr Fitzpatrick said the ACT Government had a “lease variation charge” on land being changed by developers. At the moment, that money was seen as a tax to be used as general revenue.

Mr Fitzpatrick suggested the money would be better spent to improve communities where developers were putting up new dwellings.

“If two or three dwellings are being turned into 20 or 30 apartments, therefore the public spaces in that neighbourhood have changed in what they need to do, so that charge should be spent fixing up that park or fixing a footpath or planting trees,” he said.

“If you gave the developer the choice of paying [for example] $1 million in lease variation charges or spending $1 million improving an area, I’m sure they’d say yes [to the second option] every time because they know it’s going to have a benefit to them as well from a marketing perspective.”

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Mr Fitzpatrick appears ignorant of the primary reason as to why government should tax away any land value uplift. By implying that developers should be able to keep and decide how to spend this value, he labels himself a neoliberal ideologue who does not understand land markets.

HiddenDragon8:26 pm 13 Nov 22

“Mr Fitzpatrick said the ACT Government had a “lease variation charge” on land being changed by developers. At the moment, that money was seen as a tax to be used as general revenue.

Mr Fitzpatrick suggested the money would be better spent to improve communities where developers were putting up new dwellings.”

An interesting suggestion, but if the ACT property industry wants radical stuff like this to happen, it needs to summon up the necessary intestinal fortitude and use its considerable PR resources to start talking loudly and publicly about the root cause of the problem – i.e. the spending habits and trajectory of the ACT government and the connection between that and the costs of putting a roof over your head in this town.

As things stand, the property industry, like most other elements of the Canberra private sector, seems to assume that an ever-expanding ACT government is a good thing (because it means more customers with cash in their pockets) but that someone else should pay the requisite rates, taxes, levies, duties, charges, surcharges etc. etc. to fund that expansion.

This Magic Pudding thinking has gone on for too long and the air is now thick with pigeons coming home to roost – most notably, but not only, in relation to housing cost and choice.

The reason that nobody stays in those apartment blocks is that so many of them are absolute dogboxes. They are built for maximum profitability, not maximum liveability, so as soon as a better option comes up, people take it.

My current apartment faces due south, which means our balcony gets (maybe) one hour of direct sunlight in the middle of summer. It’s only single-glazed, so winter is absolutely freezing, and of course the gap between the inside and outside temperatures leads to mould.

You might reasonably ask why we live here. The answer is, by putting up with this garbage architecture, we are saving around $5000 a year. And because after a month of frantic searching last November, we had to move fast to get accepted to live anywhere. It can be argued that we made a “choice”, and that’s true. But it’s hardly a choice between optimal outcomes. We could pay more to live in a “better” apartment, but the point I am making is to ask why such substandard garbage is allowed to be built in the first place.

If I had my way, I’d bulldoze the majority of apartments in this city and insist that they were rebuilt to face north, with decent noise insulation and double glazing. More roof gardens would also be a plus.

devils_advocate9:40 am 11 Nov 22

1) whatever the LVC revenue is spent on, it is a (significant) addition to the cost base and developers will not proceed with the project unless they are confident they can recover the deadweight loss of that tax, plus a return for their capital, labour and risk.
2) perhaps equally onerous is the (in practice) 2 years of bureaucratic regulatory burden to get a project through the merit track.
3) the additional requirements on ground coverage and tree canopy (which are in addition to overlapping solar envelope and plot ratio rules) will render more infill sites unviable.
4) taking into account stamp duties that were paid on the lock up front, LVC, holding costs during regulatory delays, and then the stamp duty paid on the subdivided land, as well as the permanent uplift in rates liabilities from the subdivided block, each unit might have hundreds of thousands of dollars of deadweight losses factored into the eventual sale price.

These are of course just the taxes and losses imposed by the ACT government.

Of course it makes sense that developers look elsewhere!

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