week 10 Flashcards
government role in urban development
o Prevent market failure – Competition among both producers and consumers that does not function efficiently, failure of price system to operate may create an un optimal outcome for society (inefficient allocation or resources
In the real world anti competitive practices could inflict damages
o E.g. Businesses may seek ways to restrict supply through artificial limits on the outputs of goods and services, supply reduces, higher prices, higher profits
o As a result businesses may reduce wellbeing on the community by wasting resources and slowing use of technology and innovation
o Hence it is important for government intervention to prevent market failure
government role in the urban development - for the housing market
To facilitate the operation of the price system/market by:
o Legal & Social Framework conducive to its operation
o Maintaining competition
Supplementing & Modifying the operation of price system by:
o Redistributing Income & Wealth
o Reallocating resources to alter composition of national output
o Stabilising the economy
examples of government intervention: population growth household wealth density planning transport costs building costs
• Population growth
o Immigration policy – international
o State migration – jobs, affordability, growth, wages
o Encouragement (baby bonus -¬‐ Australia)
o Control (one baby policy – China)
• Increase in household wealth
o FHOG
o Wage rises
• Density
o Planning provision for increased density in inner cities (Melbourne 2030)
• Reduction of urban sprawl
o Urban growth boundaries
• Planning
o Change in uses and location of particular uses
• Transport costs
o New infrastructure
o Old infrastructure – increased usage
o Pricing
• Building costs
o Constraints on materials
o Unions
o Occupation Health & Safety (OH&S )
o Changes to legislation (air conditioning, building code to 6 star minimum for houses)
explain donut theory
consists of the concentration of urban activity on the ring road (where the newest and most advanced generation of housing estates and office parks are located) and the parallel physical disappearance of all that remains inside (the interior is affected by an accelerated process of obsolescence that leads to the demolition of a multitude of buildings).
First to go is the city centre (Melbourne 1960’s-1970’s onwards until recently
explain zones and boundaries between zones
-effeect of negative externalities near a land use boundary
The boundry may have a depressing effect on adjacent location rent (even for compatible land uses)
Negative externalities – noise pollution – airport, freeway, large commercial centers near to residential land, will reduce value of the land
The bid-rent curve is lower near the land use boundary, then rises as distance eliminates the externality
*see graph
rent and land rent values
o Location rent = rent gradient X distance from edge
Example: rent gradient = $8000/16km = $500/km
see graph
draw the ‘cross section of land rents house’
emmie v
Real property rents change as we move out from the CBD towards the urban boundary
what is urban sprawl
Urban sprawl or suburban sprawl
The expansion of population away from central
urban areas into previously remote and rural areas
Particularly resulting in low-density communities reliant upon heavy automobile usage
An urban growth boundary, or UGB,
A regional boundary attempt to control urban sprawl
Mandating that the area
Inside the boundary be used Higher density urban development
Area outside be used Lower density development
Effect of change in economic variables on rents and urban city development:
With population growing, what will happen to rents if there is:
o Constant Area
o Constant Density
Income growth applied to greater purchase of land
Transport costs reduced savings applied to greater purchase of land
Effect of population growth with constant Area:
Holding all else constant, including per capita income & transport cost per person)
If a city grows by increasing density instead of area
Property rent growth will be relatively greater the closer to the centre of the city. Bid-rent schedule becomes steeper.
If a city grows by increasing area rather than density
Property rent growth will be relatively greater closer to the periphery, bid-rent schedule remains constant – shifts upwards only
see photo
Effect of increased income growth applied to greater purchase of Land (population constant)
o Increased Income Growth (e.g. higher Household income due to FHOG)
The effect of income growth is more complicated to examine:
o People can elect to spend their additional income in various ways
o Expect that people elect to spend at least some of the additional income on purchasing more urban land
o Such as houses on larger lots, neighbourhood with more parkland and golf courses, and smaller household due to more people living on their own, etc.
o Thus a rise in incomes would spread the city out spatially
o Reducing its density in general reduces the rent gradient
o Increasing real income per capita (holding population
Effect of increased income growth applied to greater purchase of land:
see photo
Effect of transport cost reduction savings applied to greater purchase of land:
o Declining transport costs (per person, per km) holding population & income constant
o Density reduces
o Always reduce the value of land rent in the CBD
o The effect on the land rent near the periphery is generally ambiguous depending on changes in density (eg is density is same and no increase in spatial area)
explain plycentric city
All cities must be polycentric because different land uses have different and multiple central points
o rent gradients and land values reflect
o New bid-rent schedules for each business or major activity centre
o The rent-gradient is traced out taking account of these
explain the neighbourhood succession model
I – Growth period and rapid rise in land values
II – Neighbour hood enters period of stability and maturity
III – Over time can either decline or enter new growth as land values rise
EG. Box Hill land values increased dramatically with growth in activity centre
IV – Further decline as area loses value and less attractive or it can rejuvenate. EG Re-Gentrification of inner city area, Williamstown