Gentrification: what happened to our cities and lessons we should learn

Earlier this month I argued that urban policy-makers didn’t single-handedly create Melbourne’s much envied laneway culture (How did Melbourne’s ‘laneway culture’ come about?). Their contribution was important but it was primarily about facilitating underlying economic and social forces.

There’s a more general point here. Most of the big changes in cities aren’t shaped by planners but by structural pressures and trends. Much of the challenge facing urban policy-makers is to understand these pressures and guide and attenuate how they work geographically.

Consider the gentrification of the inner city that started in earnest from around the 1970s in Australia and led directly to today’s stratospheric property prices. It’s instructive to think about what caused gentrification because it shows the idea that we can confidently plan urban futures over long time periods is largely a conceit. (Fn 1)

Could anyone in the 1950s or 1960s have confidently predicted the extent of gentrification of the inner areas of Australian cities? It’s hard enough to identify some of the key forces that produced the inner city revival, but the idea that policy-makers knew where it would go – or deliberately planned today’s outcome – seems very unlikely.

In the 1950s the inner suburbs of Melbourne and Sydney (defined as 5 km radius from the CBD) were relatively dense mixed-use working class suburbs with terraces, pubs and factories. Housing was relatively cheap and attracted migrants who in turn generated demand for “exotic” services like cafes.

Around this time the departure of manufacturing for the suburbs began in earnest. It was driven by a number of factors, including new ‘horizontal production’ methods, reductions in the cost of truck transport and increasing traffic congestion in the inner city.

With cheaper cars, better roads and the opening of new areas for housing, much of the inner city blue collar workforce followed manufacturing to the suburbs. So did migrants, most of whom aspired to live in larger detached houses.

The exodus of industry was crucial for gentrification – it made the inner city a much more pleasant place to live.

The rapid expansion in higher education in the 60s and 70s introduced many staff and students to the lifestyle possibilities of the nearby inner city. Rents and house prices were competitive with the suburbs, at least in the early decades of gentrification.

Later, declining household size – itself the product of upstream changes in factors such as fertility – meant small inner city dwellings provided more space per person, especially for the expanding cohort of professionals who worked in the CBD. They married later, had fewer children and hence required less space. Most terraces could in any event be renovated to function better and could be extended to some degree.

Gentrifiers were initially drawn to the inner city by the diversity of jobs it offered and later by the CBD’s increasing specialisation in high-paying Government, corporate and producer services jobs. This shift in employment geography was a consequence of higher level economic changes brought on by the transition from a goods to a services and knowledge-based economy.

Increasing female workforce participation helped to make the then-fringe suburbs, which were progressively becoming more distant from the centre, less attractive to this group and conversely made the accessible inner city, which also had the highest density of public transport routes, correspondingly more attractive. The high residential density of the centre also complemented the lifestyle of these smaller, richer and better educated households. Old buildings that formerly supported industry and a much larger population provided venues for restaurants and other lifestyle services.

These are some of the forces that came into play at different times but worked synergistically to produce gentrification. While it might seem easy to understand the broad outline of these changes in retrospect, it is hard even with the benefit of hindsight to unpick exactly how the events unfolded, what relative contribution each factor made, or how it might have worked out if some of these factors had been different or even absent. It is harder still to sort out cause and effect at the geographic level of individual suburbs. Perhaps a small difference in one factor could have produced a wildly different outcome.

Those difficulties however are trifling compared to how hard it is to identify all the relevant factors – with appropriate weightings and timings – that will shape Australian cities over the next 50 years and predict how they will combine and what outcome they will produce.

As I’ve observed before (Can outer suburbs be more adaptable for future generations?), the idea that we can go one better and deliberately create or plan some idealised future based on today’s values is ambitious to say the least. Of course some decisions have to be made today in the expectation their effects will be long-lived, e.g. transport infrastructure, but we should nevertheless focus on maximising the ability of our cities to adapt to new and unforeseen circumstances.

We should mostly shy away from the small stuff – including physical design – and focus on the big picture stuff like having flexible and efficient institutions and processes. We should focus on removing impediments and frictions to adaptability, such as hefty stamp duty on property transactions. Prices should reflect real costs rather than implicit subsidies. The cost of negative externalities should be internalised e.g. by road pricing. Our institutions should be open and accountable.

We should be aiming to have an urban system that can absorb and adapt to change. But we should be wary about privileging today’s technical understandings and political views; because there’s a good chance they’ll be wrong.

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(Fn 1) This discussion largely reprises an article from 12 May 2010, What caused inner city gentrification?