We’re all talking about housing at the moment, and what we should be building better. One thing we need to build is better YIMBYs. YIMBYs? They’re the “Yes In My Backyard” movement that kicked off in the US a few years ago.
Initially political libertarians doing some political “seeding”, in Australia it is largely younger people lining up against those they accuse of being NIMBYs, the “Not In My Backyard”-ers. The YIMBY movement is raucous, energetic, and bold — and also utterly misdirected in its critique, poor in its analysis, serves its ostensible cause badly, but possibly serves some shadowy masters well.
NIMBYs are not getting a good shake in the media, it’s fair to say. They’ve been portrayed as unrealistic blockers of new housing blocks. In Melbourne, a series of lurid articles in The Age have emphasised some of the more particular and peculiar heritage and planning cases around. Articles there, and here, have identified drawn-out planning struggles over height and heritage as the main barrier to an increase in the inner- and middle-ring housing supply. If only these people got out of the way, there’d be apartments for all.
But very little of this fits the facts or the complexities of trying to shape housing availability in a private-supply market. Indeed it’s so misdirected that it seems to have an air of proxy war about it.
For the YIMBYs, the problem is simple, and the answer is simple. There’s a lack of physical housing supply. The cause is the blocking of new build by planning redtape, heritage controls and one-sided resident activism. Remove all these, and the cities will fill with new apartment blocks, whose sheer volume will force the price down. None of this is true.
We need to look at a few facts about the housing crisis, and what’s really causing it. And the first fact is that this is not per se a building issue. It only becomes one when you eliminate every other mechanism for change. That’s the same neoliberal process as eliminating every economic control mechanism except interest rates, and then grimly ratcheting them up until the place is a wasteland called equilibrium.
To achieve this, YIMBYs have focused on one part of the process: planning approvals. They’re held up, they’re choked, overwhelmingly, it is alleged, by heritage concerns and overlays. Our cities have become mausoleums, locking younger generations out of home ownership and a viable rental market.
Thus YIMBY activist Katie Roberts-Hull objected to the heritage classification of a concrete brutalist multi-storey car park in Carlton in the Melbourne City Council zone. She followed it up with an an attack on Yarra Council’s win in the Victorian Civil and Administrative Tribunal (VCAT) which denied the Royal Hotel in Clifton Hill an application to cease trading as a pub and convert to apartments.
In Brunswick, organiser of Melbourne New Progressives Jonathan O’Brien, campaigning around a rejected proposal by the allegedly community-focused Nightingale group — well on its way to becoming a Kombucha LendLease — complained about the power of overlays, and suggested councils stop trying to preserve “bluestone cottages with drop toilets”.
In our own pages, the usually perspicacious Benjamin Clark suggested that a cultural attachment to the house and land was holding back apartment development and that we should demolish a suburb of Victorian/Edwardian houses such as Albert Park to build apartments.
Naive and ignorant
All of this is badly reasoned, and some of it shows a mix of naivete and ignorance of the planning and building process.
First, there’s been no slackening off in building approvals over the past decade or so (save for the past year, which is clearly a result of interest rates rises). Close to 130,000 planning permits were issued in Victoria in 2021, a new high at the time.
But should there be more? It’s planning approval numbers that YIMBYs focus on, suggesting they will lead to more dwellings. But this is not the case. As Peter Martin in The Conversation has shown, dwelling completion rates are far more sluggish, rising from about 32,000 (across Australia) in 2010 to about 50,000 in 2021. Furthermore, in the past decade the rate of dwellings under construction has soared in relation to completed dwellings. Until 1995 the ratio was about 2.5:1, as it had been since 1960. By the 2000s it was running at 3.5:1, and by 2020 it’s about 6:1.
But, I mean, what about that brutal vacancy rate for rentals? Only 0.8% in Melbourne, right? Well, wrong. That much-quoted vacancy rate is simply the rate of properties on the market, for rent, vacant. The full vacancy rate is significantly larger according to an AFR report, which says it’s about 4% of 1.5 million or so residential properties — as measured by water (non) use in three water supply areas. That’s about 60,000 properties.
Most of those are investment properties. As the AFR notes, the full rate of investment vacancy is a whopping 17%, which accounts for most of the 60,000 vacancies (drawing on a report by Prosper Australia, the old Henry George League. Go Georgists!).
There are multiple reasons. Negative gearing and ever-rising rents give incentives to keep places empty. About 25,000 properties in Melbourne are “whole house” Airbnb’d at any one time. That gets even stickier, because as the report shows, these vacancies are concentrated.
In Melbourne, 25% of properties in Box Hill are vacant and off the market. Now let’s be honest. We all know what that is. Box Hill is now a substantially Chinese-Australian city. Those gleaming towers going up. They’re empty stores of value for overseas cash. And they’ll stay empty. And new ones will be built to be empty. And building them will increase the price and shortage of key materials, and the inability to get skilled builders.
What about heritage as a blocker? Again, largely spurious. The idea that thousands of projects are getting stalled at the gate by approval rejection is a total fiction. Only 4% of planning applications are rejected in Victoria, and only a fraction of those are heritage related.
What about VCAT knocking back a pub conversion to apartments? Is VCAT a secret heritage NIMBY? That suggestion was a cause for rueful laughter among grizzled heritage activists. VCAT was designed to make the planning system pro-development. And it delivers. Four of five Melbourne councils assessed by a consultant lost 70% to 75% of their cases at VCAT to the planning applicant (including VCAT-ordered variations).
But, but, but, aren’t these courageous developers trying to build our glorious cities against the scheming bureaucrats? Amazingly, no. In a housing system based on speculation, they’re land banking, and making money from not building.
Once again Prosper has the figures. Ten and more years ago, huge areas were released to private developers on Melbourne’s fringes. Those remain about 60% undeveloped, with the developers pocketing an annual increase of about 6% over inflation. In the Manor Lakes estate north of Wyndham Vale, developed by the Dennis Family developers, each vacant lot has appreciated by a quarter of a million dollars over 15 years. This gives the lie to Clark’s simple suggestion that cultural factors are driving house-and-land dominance.
But there’s not many single-house builds going in within about 15 kilometres of the GPO in Melbourne. The single-house estates in the outer suburbs don’t offer apartments, and the government doesn’t make them. And as veteran urban commentator and activist Adam “Bloodied Wombat” Ford pointed out in a comment on Clark’s piece, people choose house and land because it holds and appreciates in value faster and more securely than apartments. Which is why developers don’t give buyers the option. And why the state government has made no effort to push apartment building round outer suburban hubs.
It’s capitalism, stupor
Every target the YIMBYs has is wrong. Their movement seems to be as much a political-cultural one, with a bit of intergenerational warfare going on. It is utterly indifferent to the actual process of how things get built and the fact that property-as-asset and speculation will always divert production from real need. Some of them are apolitical knowledge class elites who identify with capitalism in its current form, want to be part of it, and blame the state for the market’s failures.
Others from the Labor side appear to have adopted the Labor nihilism, a renunciation of actually shaping how we live in favour of being nothing other than a servant of capital. One wonders if some YIMBY activity is a “softening up” tactic for what Victorian Labor is about to do — remove planning powers from local councils altogether. Orienting your politics to simply facilitating capital is the “trickle-down” theory from the left — the desperate idea that if you let them have open slather, accidentally some small proportion of what they build might make it to market. There’s a Sydney YIMBY contingent too, but it’s mostly Honi Soit libertarian-communist burnouts attitudinising.
The anti-heritage obsession? A total distraction. We’re not going to demolish bluestone cottages to build slab-tilt apartments. And if you find one which still has a drop toilet, then Heritage Victoria will send helicopter gunships to protect it.
Quoting the occasional gnarly and sometimes embarrassing heritage stoush through the pro-YIMBY faction in The Age — such as the attempt to preserve a power substation in the open, oh dear — is a distortion of the way inner-city development has worked. It should be obvious that the places with the most densification — such as Brunswick — are those with the most heritage. There remain thousands of developable sites without destroying what makes the city worth living in.
Furthermore, if YIMBYs are going to go up against heritage, they are going to end up a bit bloodied themselves. If you’re going to propose that we sweep away swathes of Albert Park — which strikes me as nihilistic and philistine — then you’re going to lose. Five hundred houses in Albert Park, about 10 streets, would be worth, what, a billion bucks? More? They’re filled with people who’ve been fighting heritage battles for decades. Mass demolition is not going to happen. Nor should it.
So what do we need to do? What we need first off is strong disincentivising taxes on six-month-plus vacancies, holiday houses and two-year-plus non-development. Real punitive hits on such speculation to get properties back on the market by wiping away all gains from vacant appreciation. The punitive vacancy tax — we have a lame version of it already — could be especially targeted at foreign ownership (any and all, no specifics).
I very much suspect YIMBYs won’t be interested in talking about that. That would include an Airbnb tax that Yarra Council’s socialist and independent councillors are proposing and other councils have implemented.
Yes, we need to build. We need to build fast, and good, and genuinely affordable. We need the state to do it or direct strongly as building for living, not for speculation. Without any change it would seem obvious that the ratio of build-to-leave-vacant would climb steadily as a ratio of all build. Whatever limited expansion in supply was achieved would actually embed high rent charges. Negative gearing and other factors will always give a strong incentive for vacant maintenance.
We need more audacity than the YIMBYs have, not less. As your correspondent noted, in oh look, 2009, we need whole new cities connected to our existing cities. Set up state build-to-buy corporations, build huge well-designed towers, vibrant hubs, entire new possibilities. The Andrews government’s plan is to use the fictional suburban rail loop to override planning in a range of activity centres to put in a few apartment towers on top of a Coles and a JB HiFi.
But take a look at the map of Melbourne and you’ll see that we can build a whole city 15 minutes from Melbourne in the west. From Brooklyn station, through Altona North to Laverton and Truganina (I wonder if we got permission before naming that piece of dispossession after a dispossessed?) there is a whole chain of vacant and low-use land which, with a real plan, could be the place where a million new people could go into stylish, well-designed, distinctive new urban forms, thus also reducing the inequality of access to centrality.
That would require something more than the existing proposals. It would require the government to be proactive, and to be a builder. Maybe beyond the short-term changes, that is something the YIMBYs could get behind. To build a better city, we need to build better YIMBYs.
Well done, Guy, but isn’t it tiresome that you need to shred these paper thin arguments?
Where are our useless media!?!
Busy blaming ‘the internet’ for their decline in credibility and market share …
FIRE and media joined at the hip is the issue in claiming various reasons for rental shortages, suggesting an opportune time for property investment?
‘I mean, what about that brutal vacancy rate for rentals? Only 0.8% in Melbourne, right? Well, wrong. That much-quoted vacancy rate is simply the rate of properties on the market, for rent, vacant. The full vacancy rate is significantly larger…’
The market indicators are more about suggestive FIRE PR inc. analysis of paid ads via main media RE platforms ignoring word of mouth & private micro markets e.g. many CBD apartment developments, ‘hedonic indexes’ and personal ancdotes; highly flawed FIRE managed data and analysis.
The ABC has been sold this same kool aid kit.
They are about to shred their credibility, by putting into the blender.
Thanks Guy, good to get it down. I must say that to me, the YIMBY stuff looks like astroturf, or at least growing from astroturf seeding and fertilising. To the extent it has genuine members they are, at best, useful idiots for the developers. And of course the “movement” is all well packaged for media consumption. A genuine movement to tackle the inequities built into our housing economy is needed. One that makes worthwhile demands and is a genuine threat to all incumbent politicians. Hopefully your work here contributes to building a better narrative for a movement of those currently facing bleak prospects and those who want to support them.
One of the better articles I have read on the housing crisis, goes close to nailing the real problem that many renters or potential buyers just can’t afford the housing available in the market place and no end of building more high rise apartments will fix this problem, what we really need is the Government to grow some balls and take on the speculators (investors) introducing legislation that forces investors to rent vacant accommodation at reasonable rents and at the same time build more public housing not for private profit but for social need, I am paye taxpayer and have no problem having my taxes used to build pubic housing but I resent my taxes being used to subsidise some shonky developers.
The most amazing part I think is that the completion rate hasn’t changed appreciably in fifty years.
Considering the increase in population growth over the last 15-20, and particularly the increasing share from immigration that produces a much sharper pressure on housing, it’s obvious why demand is far outstripping supply.
The first variable that should be tweaked is the one that can have the most immediate impact – reduce demand by limiting NOM to 100k/yr for ten years (or until rental vacancy rates are >4% and median house prices <= 5x median income).
Ultimately, the bubble cost is in the land, so the only way to fix it is to make land cheaper, and the only way to make land cheaper is to either a) price control it or b) make more of it available.
Councils who have the land could sort of achieve (a) by re-zoning and selling land they own at cost (to get basic services to it).
But (b) requires Government to “encourage” existing landholders by stepping in and slapping on some big bad taxes – or stronger – particularly on land that is zoned for residential use or densification but not under active development (ie: land banked). If it were up to me I’d allow a single-block exception for individuals, and give land-banking developers 12 months to start building on the land they have and five years to finish. Then it reverts back to council ownership (subsequently, GOTO (a)).
Australia has, by any reasonable practical measure, an infinite supply of land. Consequently it should have some of the cheapest housing in the world. Instead it has some of the most expensive. The economic and social destruction wrought on the country from this is immense.
Housing is only “housing” if it is within travel distance of where the occupants need to be during the day. By that measure Australia’s habitable land supply is limited by the number of viable city centers. (Per Guy’s comments in the article.) We’ve barely got half a dozen. Look at most of Europe and the USA and it’s towns from one side to the other (occasional deserts and forests notwithstanding).
And yet housing is unaffordable in Europe and the USA too. There’s more to it than that.
The fact that essentially unproductive assets can be such a store of value is the heart of the problem.
You’d think COVID would have cured people of the industrial-era idea that everyone needs to traipse into
a factorythe CBD every day to work, then traipse home again.So that’s a problem that needs fixing, not a fixed state that has to be worked around.
My geography is not particularly good and even I could think of ten population centres off the top of my head other than the capitals and immediate surrounds that could and should be grown: Cairns, Townsville, Mackay, Rockhampton, Coffs Harbour, Port Macquarie, Newcastle, Bendigo, Shepparton, Launceston.
Yes…?
An Australia with a dozen more cities of 100,000s, built up by sucking a few million out of the four main capitals – and especially Melbourne and Sydney – would be a much better Australia.
It’s madness to look at either of those places as a single entity in terms of housing affordability. There are plenty of locales in the US and Europe with extremely affordable housing, and with excellent employment opportunities to boot. Do you not see the “you could buy a one bedroom apartment in Sydney, OR you could buy a 10-room chalet in France” type posts on Facebook ?
Agree with most of those replies. There was the famous campaign recently in Italy to attract people with property prices of 1EUR. Of course there were strings attached: heritage and repair requirements, and simply not being where people wanted to be. Only the self-sufficient or retired can just move to where they choose. In my experience Covid’s erasure of the commute has only been partial: even if you’re not commuting every day, you do need to travel some days. At least it seems to have put a more permanent dent in air travel (for work).
And yes, there are many more towns, even quite big ones, in Australia. Getting people to settle there probably isn’t a short-term process. Plenty of available stories about people who’ve come to the conclusion that it will take them a couple of generations to be accepted as locals.
Problems that have been a long time building very likely don’t have quick or easy solutions.
Incidentally: I think that the problem of one-bedroom apartments you mention is indicative too. There aren’t a whole lot of those. Indeed in housing stock it’s very hard to find anything smaller than three-bedroom. Part of that is the financial “wisdom” that one must buy the largest house one can afford, in order to maximize the tax-free gains. More varied, and especially smaller, dwellings would be a boon, I think. Also things like stamp-duty that work against people moving to suit their changing circumstances.
Making housing dirt cheap would be a significant factor in attracting people, I would think.
And while you might not be a “local”, in a small city of 100k people that’s not really going to be an issue. It’s not like a small town of 5000-10000 where not having decades of residence behind you might actually have consequences in trying to deal with local businesses or who your kids are allowed to play with (I grew up in such a town, I have an idea of what it’s like).
I agree with that. Even with NOM normalised to something like 100k/yr, it would probably still take a decade of building to catch up.
Er, really ? Admittedly it’s been a good 10 years since I had the slightest interest in apartments, but my experience in the ~10-15 years before that is apartments were overwhelmingly 1- and 2-bedroom, with studios becoming more common at the expense of both. 3-bedders were uncommon and 4-bedders all but unheard of unless essentially custom-made by buying two 2-bedders beside each other and knocking some holes in walls.
My first home was an apartment bought OTP in 2000. From memory the split of 1/2/3-bedroom floorplans in the complex was something like 20/70/10%.
I couldn’t find any stats quickly on apartment sizes, but given they are mostly bought by investors or childless individuals/couples, I would be floored if this generalisation has changed. If anything I would expect even fewer 2-bedders+, replaced by more 1-bedders and studios.
No, it’s because people today are buying houses later in life (typical age now 35-40 rather than 20-25) with less opportunity to upgrade in the future, because moving from one house to the next is becoming increasingly expensive as values continue to rise (since things like agent fees and stamp duty are a percentage of price) and because the structure is the cheapest part, so going bigger adds relatively little marginal cost (and similarly, only marginally more “tax free gains”).
The typical first home buyer today is only going to get one shot at their “forever home”, so of course they’re far less prepared to compromise with a ‘the next one will be better’ perspective.
Found the following data gathered at the last Census.
https://www.abs.gov.au/statistics/people/housing/housing-census/latest-release
As I thought, apartments are dominated by studio/1/2-bed layouts.
strong agree. Have a look at the substantially windowless micro flats in places like parts of Richmond to see where deregulating development will get you. How about densifyng cheaper land in Ballarat, Bendigo, Geelong, hell even Warnambool. Would likely be cheaper, easier and if you upgrade the rail links, better quality of life for people generally. The YIMBY’s are at real risk of becoming glove puppets of developers who will use one or two affordable tiny box flats for bait to whack a gigantic private sector block of flats anywhere they can. We need to be a bit smarter about what’s happening here. Densify by all means, but don’t kid yourself NIMBY’s are anything other than a trivial part of why we can’t do it effectively.