A family friendly 3 bedroom apartment in Southbank, Melbourne. This one's available for short term stays, $2,100 for 7 nights (source: Stayz.com.au)

It was good to see The Age devoted its editorial yesterday to the important issue of planning Melbourne’s long-run future (Melbourne’s growth needs careful planning).

I don’t know who writes these things, but this one is a jumble of the usual tropes and button presses. Be that as it may, one passage that’s worth exploring further is this reference to development in the city centre:

The conceit is that the rapidly developing urban core of Melbourne is exclusively home to young people attracted by the non-stop lifestyle and employment opportunities. But this ignores the fact of families, seniors downsizing from suburban homes, migrants and others in need of social services.

I’m not sure what’s intended by the word “conceit” as it’s used here. If the writer means the urban core is not dominated by young people then he or she is just plain wrong.

According to the 2011 Census, 23% of the population in Greater Melbourne is aged between 20 and 34 years. However in the suburb of Melbourne (mainly the CBD and St Kilda Rd) it’s 60%; in Southbank it’s 58%; and in Docklands it’s 49%.

That’s an enormous difference; it confirms the youth orientation of the city centre I’ve discussed at greater length before e.g. see Who lives in the city centre?

Or perhaps what the writer intends by “conceit” is that migrants, families and downsizing seniors are crowded out of the urban core by all those young people buying up tiny one and two bedroom apartments.

But if so, that’s not true either in respect of migrants; they’re over-represented in the city centre.

Looking again at the 2011 Census, 63% of residents of Greater Melbourne were born in Australia. But in the suburb of Melbourne, it’s only 28%; in Southbank it’s 35%; and in Docklands it’s 36%.

The fact is Melbourne’s urban core – where most of the new towers that seem to antagonise the Fairfax editors are being built – is dominated by residents who were born overseas.

It’s certainly true, though, that there aren’t many families with children in the city centre. Couples and singles with children comprise 63% of families in Greater Melbourne but only 23% of those in the suburb of Melbourne.

The idea that this is somehow “a problem” is weird. The implication is that government should step in to ensure developers provide more three and four bedroom apartments so families can live in the centre.

Since developers are already more than happy to provide penthouses at a price, what’s really being proposed is that larger apartments should be subsidised so that they’re “affordable” for middle class families (1).

The subsidy would presumably come from the developer or government. In the former case it could increase apartment prices more generally or lower amenity; in the latter it’s money that would be diverted from other purposes.

There’s a strong argument for more social housing in the city centre (and elsewhere) but I’ve not heard a sensible case for market intervention to promote families in the centre. It seems to come in part from the idea that all suburbs should have much the same demographic profile; any significant deviation is a deficiency (see also Are bigger cities less diverse?)

But small areas like suburbs and municipalities aren’t always the same on all or even most dimensions. There’ve always been suburbs and municipalities with a distinct profile e.g. based on attributes like ethnicity, sexual orientation and, of course, socio-economic status (e.g. see herehere, and here). (2)

The urban core is already very different to the rest of the metropolitan area – and even to its immediate neighbours – on a host of dimensions. It’s by far the most specialised location in the metropolitan area.

Other locations don’t have all those corporate and institutional headquarters, cultural facilities, sporting venues, courts, the Parliament, public transport infrastructure and, in particular, hundreds of thousands of jobs compressed into a tiny area (including Southbank and Docklands, Melbourne’s CBD covers just 7 sq km).

Urban residents who have a choice like to locate close to people like themselves. The young and unencumbered like living in the buzzy city centre and are prepared to trade-off “space for pace” in order to do it.

In any event, there’s plenty of family friendly accommodation in the rest of the metropolitan area, including in the inner city. Detached, terrace and town houses make up 20% of all housing in the City of Melbourne and 63% in the adjoining inner city municipality of Yarra. They account for 84% of the housing stock in Greater Melbourne. (3)

And it’s not as if life on the streets of the city centre is a mono-culture of hipsters and overseas students. During the week it positively teems with mums and dads who work in office blocks; there’s a constant flow of school children catching the train to and from the centre; and on weekends there are throngs of families with young children visiting attractions like the National Galley.

That highlights a key point; the urban core is the most accessible location by train and tram in the metropolitan area. It doesn’t have to look like the rest of the city because it’s easy to get to. Indeed, the reason its so different is in large part because it’s so accessible.

The “deficiency” of empty nesters cited by The Age’s leader writer is another case of a non-problem. It’s true there aren’t many of them in the urban core but that’s by choice; there are plenty of one and two bedroom apartments in the city centre for empty nesters (they’re downsizers!) and it’s not as if they don’t have money.

It would perhaps be nice to have more empty nesters living in apartments in the centre of Melbourne but, as with families, the social benefits aren’t so obvious that they justify a subsidy; there are better purposes e.g. social housing.

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  1. Subsidising middle class residents to live in the city centre isn’t without precedent e.g. New York; and now proposed in San Francisco for residents earning $100,000 – $140,000 p.a.
  2. Clustering of individuals with a common interest, e.g. ethnicity, offers many benefits; however geographical concentrations of poverty work in the opposite direction e.g. see Why the new research on mobility matters: an economist’s view.
  3. The extended CBD covers 7 sq km and the entire municipality of Melbourne covers 35 sq km; that’s out of an urbanised metropolitan area of around 2,500 sq km and an administrative area of 10,000 sq km.