Melbourne’s hot apartment market means the city is the focus of claims that all those high-rise apartment towers in the CBD will be the slums of the future.
These sorts of dire predictions are made on social media, or sometimes by journalists like Fairfax associate editor Shane Green in this oped on the weekend. But here’s the Lord Mayor of the City of Melbourne, Robert Doyle, two weeks ago:
…you don’t want to be left with housing stock in 10 years that no one wants … You don’t want to be building the slums of tomorrow.
The idea of “slums in the sky” is highly charged and emotive. I haven’t seen anyone question the proposition before but it’s the sort of “end of all discussion” statement that really warrants close scrutiny.
Slums can be described in a number of ways, but two key attributes are the low economic capacity of residents and run-down buildings and infrastructure.
Places become slums because of wider economic changes. In developing countries it’s usually the result of large scale in-migration from country to city associated with industrialisation. Low income workers who can’t find proper housing “squat” where they can, usually on undeveloped land, and build makeshift shelters from whatever’s cheap and comes easily to hand.
In developed countries, the archetypal case is once-prosperous established areas that lose value as a result of wider structural changes e.g. Detroit. Those who can leave do so, but under-utilised buildings attract those on very low incomes. Their capacity to pay is limited, leading landlords to reduce expenditure on maintenance. Residents tend to lack political muscle, so both buildings and infrastructure deteriorate. (1)
So what is it about all those apartment towers going up in the centre of Melbourne that evidently predetermines they’ll become vertical slums? Some say it’s because the apartments are too small and too dark. According to this report,
critics of Melbourne’s tower frenzy are warning that apartment blocks are being built too close together, shading each other and creating future slums in the sky.
Yet whatever their shortcomings are compared to housing options in other parts of the city, it doesn’t appear to have led buyers and renters to abandon city centre apartment towers. In fact the demand has never been higher; what do we know about future residents that suggests they’d be so different?
The people who’re choosing to buy or rent city centre apartments right now aren’t at the very bottom end of the income scale. Even the smallest studios and one bedroom apartments in Melbourne start round $350,000 (median $468,000) plus ongoing body corporate fees. Many residents are students or young professionals, but they tend to have high lifetime earning potential.
As to what lies ahead, it doesn’t seem plausible that those who can afford it will abandon the city centre.
These apartment towers let resident live within the largest single concentration of jobs in the metropolitan area. After experiencing long-term decline, the CBD and the inner city have experienced strong growth in both jobs and population over the last 20 years.
Policy-makers and analysts are unanimous that the ongoing shift to a knowledge economy will continue to reinforce the benefits of density and the advantages of the CBD.
Earlier this month the Grattan Institute published a report pointing out that the CBDs of Sydney and Melbourne produced nearly “10 per cent of all economic activity in Australia, and triple the contribution of the entire agriculture sector”.
Many of the jobs in the CBD pay very well and those who hold them put a high value on their time. It’s likely there’ll be continuing demand for housing in locations that minimise travelling time, as there is in places like Manhattan.
City centre apartments will also continue to be sought after for the access they provide to the cultural, recreational and specialist services of the centre. There’s infrastructure too – for example, the public transport lines radiating from the CBD give access to the entire metropolitan area.
Nor is the small size of many apartments an inevitable reason they’ll become slums. In common with other Australian cities, one and two person households are expected to comprise the great majority of the projected increase in households over the next 30-40 years.
That suggests there’ll continue to be a ready market of small households who find the diminutive but affordable size of apartments an acceptable trade-off for the unique benefits of living in the city centre.
Moreover, the City of Melbourne’s draft Housing Strategy projects the municipality’s population will grow from 116,000 at present to 190,000 in 2031. That doesn’t sound like a place that’s going to be deserted by residents; indeed, small apartments in the centre with a low ecological footprint sound like a robust way to prepare for whatever the future might bring.
The buildings are new, so right now they’re in good condition. Some are happy to assume they’re jerry-built, but these towers are all constructed in compliance with the building regulations. Doubtless some buildings are better than others, but that sort of variability is true in other construction sectors too.
They’re not likely to fall apart from lack of maintenance either. That’s partly because they’ll continue to be occupied by residents who have the resources to (and are prepared to) pay for proper care.
It’s also partly because modern apartment towers aren’t owned by the single cold-hearted, venal landlord of slum folklore. They’re strata-titled, so each building has a collection of owners. They’re mostly investors but some are owner-occupiers.
They all have a common interest in protecting the value of their asset; the tax system in Australia ensures that housing is as much an investment decision as a shelter decision. Nor does maintenance fit the stereotype of the rapacious landlord; it’s a shared, managed responsibility and it’s regulated by the strata title law.
No one knows what the future will bring but from today’s perspective there’s no more reason to think those apartment towers will become slums than the detached houses of Toorak or the terraces of Fitzroy will. (2)
I know some people think many of these apartments are “dogboxes”. Whatever the merits of that view (see Does even storage in new apartments need to be regulated?), invoking the spectre of “vertical slums” is over the top. Like so much discussion about cities, that sort of over-wrought prediction is a politically intentioned statement, not a logical one.
Slums might have poor physical conditions but many also have robust economic and social networks. Indeed, slum clearance of the type that Robert Moses undertook in New York is usually criticised for destroying strong communities.
Equally, there might well be benefits for those on low incomes if some currently well-heeled areas actually did become slums.