Karl Benz once remarked that he built a great motor car with the axiom “Das Beste Oder Nichts” meaning “the best or nothing,” and it is high time we start applying this thinking to our future city planning.
In so many ways, the property market in Sydney today is a great paradox. Inflated prices are wonderful for those with assets in the market but equally tragic for the next generation who are becoming increasingly priced out.
The quality of life in this world-class city is so brilliant but concomitantly troubling. Successful cities from around the world have grown and prospered using a heterogeneous fabric with multiple price points for all people. In any functioning society, it is essential that people of all persuasions can afford to live in it.
This poses the question: what will happen to Sydney when key workers and the like are forced to live some 30 kilometres from the centre?
In possibly the world’s most beautiful harbour city, we have witnessed real estate prices thoroughly outpace both inflation and wages. Today in Sydney, it takes 12 times the average annual income to afford the average dwelling, compared with only three times the average income some 25 years ago.
There is also less credit available from nervous bankers, lower returns on a yield basis to support a sound investment (net residential investment returns today sit at around two per cent per annum), and less appetite for increased capital outlays.
The issue we now face is that we can no longer afford to buy real estate, but we can also no longer afford to sell real estate for fear of being permanently priced out of the market. Whilst the prospect of home ownership might look bleak for many, it is important to remember that all property booms eventually end.
So, is a massive correction in Sydney property imminent? I am not sure that I yet subscribe to this view because Sydney has quite a unique set of supply circumstances. Sydney is a confined geographical basin, bound by National Parks to the north and south, the Blue Mountains to the west and the vastness of the Pacific Ocean to the east.
The city is also governed by an archaic planning and zoning code more suited to the 1926 Euclidean zoning codes and the 1932 Town and Country Planning Act of England. I liken it to a Model-T Ford – a class act in the 1920s and 1930s. It was efficient, workable and over long distances was certainly more durable than a good horse, but that was then and this is now.
Today, there is no place for either a horse or a Model-T Ford on Silverwater Road or the M4 heading to the Blue Mountains, yet we persist in repairing the parts. In my opinion, it is time to overhaul our planning system and upgrade our Model-T Ford to something more suitable for the 21st century.
That is not to say that we need to abandon any of the old guiding principles of the past. The best cities in the world are built using the historical lessons of city-making. But adaptable evolution and improvement are key, not the tenacious obsession with the oldest and most dogmatic adversarial principles that exist in the Western Hemisphere today.
It should worry us that a building in Sydney cannot be approved, designed and built in under six years. This long and tedious process inflates prices unnecessarily and is completely ludicrous. Why is it that, after we zone land for a specific purpose such as a residential flat building, we proceed to torture applicants for years with licenses, permits, DAs and CCs and under the guise of the public interest?
The planning system was built to protect existing households from new comers under the old judicial idiom “sic utere tuo ut alienum non laedas” or “use your own property in such a way that you do not injure others.” This is admirable, but in today’s complex world, economics and growth are key to a successful economy. If all the system can do is slow things down for fear of injury to others, all will be lost to those competing against us to be the best.
The current planning system no longer serves the public interest. It is the time to evolve and really start giving it our best, otherwise we may as well do nothing at all.