Real house prices by distance from CBD ($09/10). Source: State of Australian Cities 2012

Australian and US cities, which largely developed in the era of mechanised transport, are notorious for sprawling. But they’re not alone.

European cities are sprawling too. The European Commission released a report in 2006, Urban sprawl in Europe: the ignored challenge, arguing that “sprawl threatens the very culture of Europe”.

The authors note that European cities were more compact in the 1950s but urban sprawl is now a common phenomenon throughout Europe. While they’re not sprawling as much as US cities, they say there’s no sign the outward spread is slowing.

London is sometimes cited as an example of a city that has been able to contain growth within its boundaries. However this argument neglects to mention that while the population within the green belt is 8 million, there are another 12 million residents living outside it.

As Wendell Cox notes, all of London’s population increase since WW2 (6 million residents) took place outside the green belt. He catalogues the metropolitan expansion of a range of European and world cities, including Milan, Barcelona, Zurich and Moscow.

Back in 2002, the Victorian Government decided in Melbourne 2030 that only 31% of all new dwellings constructed between 2000 and 2030 would be located in fringe greenfield sites. It envisaged the proportion would fall to 22% by 2030.

The centrepiece of the strategy was the Urban Growth Boundary. But faced with growing public concern about housing affordability, the same Government watered the policy down in 2008.

A new planning document, Melbourne @ 5 Million, revised the figure to 47% of all dwellings constructed over the succeeding 20 years. This simply reflected what was actually happening in the market. In fact because not all outer suburban housing construction takes place in Growth Areas, the real figure was 58%.

The Greens also appear to have effectively thrown in the towel on efforts to contain sprawl. The party’s new report on High Speed Rail (HSR) proposes that regional centres like Shepparton and Albury should become dormitory suburbs, with workers commuting hundreds of kilometres by HSR to capital cities.

Governments are strong on the rhetoric of limiting sprawl but are weak on action. That’s because the political cost of putting in place policies that actually work would be extraordinarily high.

Cities sprawl for simple reasons. The outer limit of Australian cities was originally contained by how far workers were prepared to walk, but the coming of trams and trains at the end of the nineteenth century changed all that.

The new technology gave residents the opportunity to live in the suburbs and commute to the centre. They were able to escape the (then) very low amenity of the inner city and, because peripheral land was cheap, enjoy a lot more space.

Rising incomes and car ownership after WW2 extended suburbanisation even further by filling in the gaps between rail lines. Like the country railways of an earlier era, freeways helped open up ever-new tracts of cheap land.

Suburbanites could shop locally and soon they could work in the suburbs too as more and more employers abandoned the city centre.

With the weight of population inexorably moving outwards, governments also built major facilities like hospitals and universities in the suburbs. The city centre became an occasional and discretionary destination for the great majority of suburbanites.

Today’s outer suburbs offer an attractive bundle of benefits for many people in most capital cities. They’re especially appealing to the very large numbers of residents who put a high premium on affordable space and privacy.

Yet as the boundary of the city expands, there is an increasing number of home-seekers who would prefer to live closer to the centre. Locations that’re more accessible cost more, so they accept they’ll necessarily have to live in a much smaller dwelling and may have to share their commute with others.

In theory, the supply of apartments and townhouses in long-established suburbs should increase to meet this demand, but existing residents work hard to ensure it doesn’t (e.g. see here and here).

All those new residential tower blocks indicate supply is expanding in and around the CBD. However there’s much more resistance to redevelopment in predominantly residential inner city and middle ring suburbs.

Governments could do more to contain sprawl, but they’d have to put in a bigger effort than simply drawing a line on a map.

They could, for example, override the objections of existing residents to redevelopment proposals. They could tackle the high cost of constructing buildings over four storeys.

They could increase the cost of housing on the urban fringe by, for example, levying higher infrastructure charges or simply imposing a tax on fringe growth. That would make established suburbs more cost-competitive with the fringe.

They could raise public transport fares closer to the real cost, making it more expensive to live a long way from the centre. They could discourage driving long distances by taxing cars so they pay for the congestion and environmental damage they cause.

Some of those are good ideas for other reasons, but many of them would be extraordinarily hard politically. Governments would also come under increased pressure to improve infrastructure and services within established suburbs, where it arguably costs more to provide.

Sydney has a lower proportion of starts on the periphery than other cities, partly due to high infrastructure charges but mainly because of unique geographical constraints that can’t be sheeted home to politicians. Sydney also has the highest housing costs in the country.

In Victoria, Planning Minister Matthew Guy has appointed a Ministerial Advisory Committee to oversee the preparation of a new metropolitan strategy for Melbourne. He appears to be giving them a relatively free hand and the indications are they want to achieve a very serious reduction in the level of sprawl.

Just what price Victorians should pay and are prepared to pay to reduce sprawl in Melbourne is a challenging question that the Committee will need to address. It should take a long hard look at where Melbourne 2030 went wrong.

The Committee should also think long and hard about what can be achieved – a strategy that has no chance of success is rubbish. If they can devise a politically acceptable way to improve affordability significantly while simultaneously applying the brakes seriously to sprawl they’ll be world-leaders.