Sydney’s rich are locking out the rest of us

The city’s beach and harbourside suburbs have imposed a ‘class tax’ on property that imposes social segregation.

Sydney’s beauty is mostly reserved for the affluent. Those who live next to the harbour, the beaches and national parks pay to keep it that way.

They use councils to restrict the construction of apartments, blocking new middle and working-class residents from sharing their suburbs.

The egregious offenders are local governments representing Sydney’s most-desirable suburbs: Randwick, Waverley, the Northern Beaches and Hunters Hill, says economist Peter Tulip, a top housing analyst.

In each area, apartments are overpriced by 40 per cent to 50 per cent because of regulatory limits on construction, says a report published this week by Tulip and the Centre for Independent Studies.

Across Sydney, Tulip calculates the average apartment cost $594,000 to build last financial year – and then sold for $1.01 million. The 41 per cent premium is referred to as a “zoning tax” by academics.

You could call it a class tax too. It is paid by the wealthy, often on behalf of their children, and is the price of keeping out undesirable neighbours.

“Some planning restrictions reflect desire for social segregation by affluent residents,” Tulip writes in Where should we build new housing? Better targets for local councils.

“They have occupied the best real estate and do not wish to share it with renters, apartment dwellers or other newcomers.”

Tulip hints at a darker motivation behind the problem – one that should have no place in a cosmopolitan city.

“This may have an ethnic dimension,” he writes. “Central governments, with broader constituencies, are more egalitarian and supportive of desegregation.”

Enforced segregation

The cost of housing may be the greatest challenge to social mobility and equality in Australia. It enforces geographic segregation across generations, perpetuates economic advantage and denies millions of families easy access to good schools, high-paying jobs, beaches, parks, public transport and all the other infrastructure of modern city life.

The Greater Cities Commission, which is responsible for setting housing-growth targets for councils, is ineffective, Tulip says. The state government pays little interest, he says. No one is enforcing the targets, which are too low anyway.

The commission’s chief commissioner, Geoff Roberts, would not do an interview on Thursday. A commission spokesman said Greater Sydney had built 96 per cent of the homes set by official targets for 2016 to 2021.

Minister for Cities Rob Stokes criticised Tulip’s name-and-shaming of councils, which he said compared smaller inner-city councils with large ones on the urban fringe.

“He’s not comparing apples with apples,” he said. “Obviously we need more housing everywhere but it’s not as simple as that.”

These men share responsibility for the problem. They should know that small changes can have a big impact.

Tulip calculates a 1 per cent increase in the number of dwellings would reduce prices by 2.4 per cent. A 16 per cent increase in houses and apartments would cut prices 41 per cent.

Councils, serving the interests of existing residents, cannot be trusted to approve the numbers of apartments asked of them. They should lose that power, for the greater good.