This study considers the national scale but then focuses on local approaches, reviewing plans and interviewing officials in 13 agencies, to assess how housing are meshed with economic development in strategy formation and monitoring.

  • Project dates: 2016

There has long been awareness that ‘good’ housing raises individual capabilities and productivities and that well-priced housing in the ‘right’ locations can facilitate the growth of firms and local economies.

Housing processes (planning, financing, building, selling, letting and maintaining) influence the productivity of capital and labour. Individual dwelling outcomes (prices/rents, size, location, density) may influence the development of human capital and the formation of new ‘home’ businesses.

The broad patterns that emerge from housing market processes (mosaics of neighbourhoods, migration and commuting flows) are increasingly recognised as impacting economic performance. These processes, outcomes and patterns that operate at the levels of homes, neighbourhoods and wider regions ultimately matter in national economic performance.

The 2012 COAG report on the long-term strategic planning of capital cities highlighted that Australia’s future capacity to grow productively would be influenced by the cities and housing built.

The emerging debate about housing and productivity, however, has neither a coherent framework to shape discussion nor an organized body of evidence to inform it. Our proposal sets out a scoping study that aims to fill this gap by addressing the following objectives:

  • Setting out a housing systems framework that indicates how key processes and outcomes may have productivity and growth effects;
  • Reviewing possibilities for developing further research to make econometric estimates of key effects;
  • Recognising that some nations and cities, following the Sarkozy Commission, are on the cusp of augmenting or replacing GDP per capita, and that measures of progress and wellbeing that go beyond traditional productivity and growth policy measures need to be developed for the housing sector;
  • Reviewing existing regional and metropolitan economic development strategies to establish if and how housing fits in to these strategies.

The review will embrace the international/national econometric studies that exist but it will focus on metropolitan and local levels. It will build on existing examples (Maclennan, 2008, O’Sullivan and Maclennan, 2012) to expand the framework of connections and questions. It will review, in illustrative areas of rural and metropolitan Australia, applications of these ideas.

It will assess local documentation on housing, planning and economic development strategies in 27 locations and establish whether and how housing and economic development decisions are connected in ways that consider productivity.

12 relevant government officials will be interviewed. The research team will also establish whether local economic strategies are beginning to reflect the Sarkozy-Stiglitz view that measures of economic outcomes should go well beyond simple productivity measures such as GDP per capita, and how housing actions are connected to such measures.

The study will place the Australian housing sector at the forefront of current national and international thinking in this increasingly important area of work. By reviewing the kinds of data and models that exist and the feasibility of using them to improve empirical estimates of the key connections, the study will also indicate ways to strengthen Australian housing research capacity for the future.

References

Blanchflower, D.G. and Oswald, A.J. (2013), Does High Home-Ownership Impair the Labor Market?, Peterson Institute for International Economics, Working Paper13-3.

COAG (Council of Australian Governments) (2012), Review of Capital City Strategic Planning Systems, Available: http://www.coagreformcouncil.gov.au/reports/capital-cities/review-capital-city-strategic-planning-systems

Glaeser, E. L. and J. Gottlieb (2009) The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States Journal of Economic Literature, Vol. XLVII, No. 4; 983-1029

Goodman, R., Buxton, M., Chhetri, P., Taylor, E. and Wood, G. (2010), Planning and the Characteristics of Housing Supply in Melbourne, Australian Housing and Urban Research Institute, Final Report No. 157, Melbourne.

Maclennan, D (2008) Housing for the Toronto Economy. Research Paper 212. Cities Center, University of Toronto

Maclennan, D. and O’Sullivan, T. (2012) Raising the Game: The Economic Case for Housing, Centre for Housing Research, St Andrews University.

Oswald, A. J. (1997), Thoughts on NAIRU, Correspondence to Journal of Economic Perspectives, Vol.11: 227-228.

Productivity Commission (2013) Productivity Update May 2013 accessed 280813 at http://www.pc.gov.au/__data/assets/pdf_file/0004/123970/2013-pc-productivity-update.pdf

Regional Innovation Pty Ltd, Urbanomics Pty Ltd, ASCET (Warrnambool) (2005), Surf Coast Shire Economic Development Strategy, Update November 2005, Available: http://www.surfcoast.vic.gov.au/files/c2b6f750-a9e4-4bbf-b3ad-a00100fe6532/

RPS and Wheatbelt Development Commission (2012), Avon Sub-Regional Economic Strategy, Version 10, November 2012, Available: http://heartlandswa.com.au/index.php/research/wheatbelt-publications-reports-documents/12-wheatbelt-publications-reports-and-documents/48-avon-sub-regional-economic-strategy

Victoria Department of Planning and Community Development (2008), Melbourne 2030: a planning update – Melbourne @ 5 million, Available: http://www.dpcd.vic.gov.au/planning/plansandpolicies/planningformelbourne/planninghistory/melbourne@5million

WA Department of Planning and WA Planning Commission (2010), Directions 2013 and Beyond: Metropolitan Planning Beyond the Horizon, Available http://www.planning.wa.gov.au/publications/826.asp

WA Department of Training and Workforce Development and Pilbara Workforce Development Alliance (2013), Pilbara Workforce Development Plan 2013–2016, Department of Training and Workforce Development, Osborne Park.

Wood, G. (1988) The Role of Housing in Economic Growth, Murdoch University, Economics Programme, Working Papers, No. 21.

Wood, G. A. and Cigdem, M. (2012), Cost-effective Methods for Evaluation of Neighbourhood Renewal Programs, Australian Housing and Urban Research Institute, Final Report No. 198, Melbourne.

Key People

Project Researchers

Related Content

Research Programs

Housing and Urban Economics

Developing a better understanding of how policy and economic activities can be enacted to improve micro- and macro-economic prosperity.

Find out more