Paul Krugman once said that while we can make a reasonable fist of unpicking how a city developed historically, it is virtually impossible to predict where it might go in the future.

Could anyone in the 1950s or 1960s have confidently predicted the extent of gentrification of Melbourne’s inner city? Looking back we can attempt to identify some of the key forces that produced the inner city revival and see just how difficult it would have been to predict.

Photo by ExTester

The starting point was the departure of manufacturing for the suburbs which began in earnest in the 1950s.  This exodus was driven by a number of factors, including new ‘horizontal production’ methods, reductions in the cost of truck transport, increasing traffic congestion in the inner city and the suburbanisation of much of the blue collar workforce.

What it did was crucial – it made the inner city a much more pleasant place to live in.

The rapid expansion in higher education in the 60s and 70s introduced many staff and students to the lifestyle possibilities of the inner city. House prices were competitive with the fringe suburbs, at least in the early decades of gentrification, in part because many of the (former) migrant families who occupied inner city housing aspired to live in the suburbs.

Later, declining household size – itself the product of upstream changes in factors such as fertility – meant inner city dwellings provided more space per person, especially for the expanding cohort of professionals who worked in the CBD. They married later, had fewer children and hence required less space (although terraces could easily be renovated and extended).

They were drawn to the inner city initially by the diversity of jobs it offered and later by the CBD’s increasing specialisation in high-paying Government, corporate and producer services jobs, a consequence of higher level economic changes brought on by the shift from a goods to a services and knowledge-based economy. Increasing female workforce participation made possible by improved birth control helped to make the then-fringe suburbs, which were progressively becoming more distant from the centre, less attractive and the accessible inner city correspondingly more attractive. The higher density of the centre also complemented the lifestyle of these smaller, richer and better educated households.

These are some of the forces that came into play at different times but worked synergistically to produce gentrification. While it seems easy to understand the broad outline of these changes in retrospect, it is hard even with the benefit of hindsight to unpick exactly how the events unfolded, what relative contribution each factor made, or how it might have worked out if some of these factors had been different or even absent. It is harder still to sort out cause and effect at the geographic level of individual suburbs. Perhaps a small difference in one factor could have produced a wildly different outcome.

Those difficulties however are trifling compared to how hard it is to identify all the relevant factors – with an appropriate weighting and timing – that will shape Melbourne over the next 50 years. Will the inner city, for example, still be the key location for jobs it is today?