It's not just the buildings, high-density neighbourhoods make life worse for the poor

This article is the second in a series based on new research into the place of lower-income and disadvantaged households in a compact city.

Last year marked the first time that construction began on more higher-density housing in Australia than detached dwellings.

While many may claim this as a success for “compact city” policies, the negative consequences of this transition disproportionately affect lower-income and disadvantaged households. This is partly because of what our apartment buildings are like to live in, as yesterday’s piece in this series showed.

But there are also aspects of neighbourhoods with lots of high-density development that compound the challenges lower-income and vulnerable residents face. In our research for Shelter NSW, we identify two key problems at the neighbourhood scale: gentrification and poor infrastructure.

Further reading: This is why apartment living is different for the poor

Australia’s market-led development model underpins the gentrification reshaping our cities. This gentrification hurts lower-income residents in two main ways:

How high-density development changes neighbourhoods

Anyone who’s observed the changes in suburbs like Redfern, Richmond, Northbridge and St Kilda will be familiar with gentrification.

Further reading: When a suburb’s turn for gentrification comes

The term originally referred to middle-class residents fixing up old homes in inner-city areas. Researchers now argue higher-density urban renewal is also driving gentrification in three main ways:

1. Developments on inner-city “brownfields”: When old industrial areas in desirable inner-city areas get redeveloped (think Pyrmont or Docklands), they usually become high density with apartments designed for high-end buyers, as these offer developers the greatest returns. While not displacing anyone directly, this brownfield renewal can trigger gentrification in surrounding areas – by increasing house prices in these areas and changing their social and commercial nature. This “commercial gentrification” can price out existing lower-income residents and make them feel unwelcome.

2. Renewed private high-density buildings: In New South Wales, new laws allow termination of a strata scheme if 75% of the owners agree. Our modelling shows that, in high-value areas, gentrification will likely follow, with older, cheaper strata buildings redeveloped and resold at higher prices. This will likely displace lower-income renters, while lower-income owners may struggle to buy back in with the proceeds from their old apartment. This eventually reduces the socioeconomic diversity of these areas, so the remaining lower-income residents feel increasingly excluded.

3. Renewed public housing estates: Higher-density renewal of public housing – like the Ivanhoe redevelopment – often adds private housing to make the project “feasible” (profitable) for the developers that undertake these redevelopments for governments. Governments justify this with claims that greater socio-economic diversity in these “mixed tenure” redevelopments benefits lower-income and vulnerable residents. Some researchers disagree.

If the addition of private housing reduces public housing stock, these residents will be displaced. Even if this doesn’t happen, mixed-tenure neighbourhoods aren’t necessarily better for lower-income residents.

The ways these neighbourhoods are designed, developed and managed are central to how well they work.

To benefit these residents, these neighbourhoods should be “tenure blind” so that it’s hard to tell which parts are public housing and which parts are private.

At the same time, support services for high-needs residents and programs to help develop a sense of shared community are essential. Otherwise, lower-income and vulnerable residents may feel excluded from the redeveloped area, even if they are not physically displaced.

Further reading: Class divide defies social mixing and keeps public housing stigma alive

What happens to those who leave?

Many lower-income residents are slowly but surely being displaced from gentrified neighbourhoods. Over the past few decades, disadvantaged communities across all our major cities have been pushed to middle and outer ring suburbs.

While we tend to assume moving away from the inner city means moving into lower density, that is not necessarily the case. Particularly in Sydney, many older, cheaper apartments are in outlying suburbs.

What we see is increasing concentrations of lower-income residents both in higher-density buildings and in areas further from the CBD. These trends for Sydney are shown in Figure 1. Lower-income households are concentrated in higher density in outer suburbs, particularly to the south and west.

These trends are linked to higher-density renewal and gentrification in the inner suburbs, as an increasing proportion of jobs have moved to the “global arc”. Lower-income residents are being driven further from areas with good access to jobs, transport and services.

Lower-income and vulnerable residents suffer most when infrastructure and services are inadequate. This is especially so in suburbs with poor public transport, as they are less likely to be able to afford a car.

This problem highlights another flaw in our urban densification strategies: Australian cities have a poor record of providing adequate infrastructure and services to support higher-density living.

So how did we get here?

To understand how we’ve created these problems, we need to understand the market-led model used to develop our cities in recent decades.

In the 1940s, Australia’s housing system was driven by a belief that every citizen was entitled to a house of their own of a minimum standard. Initially, this was satisfied through extensive public housing programs.

By the mid-1950s, however, the approach had shifted to supporting home ownership as a bedrock of Australian society. As the public housing share of overall stock declined, eligibility requirements tightened. This has pushed many lower-income households into private rental housing.

As part of this shift away from direct government-provided housing, governments have increasingly relied on the private sector to deliver new housing.

Because private developers are profit-making entities, project success is tied to maximising investor return. This takes priority over delivering the best housing outcomes for residents, including lower-income households.

At the same time, planning policies have shifted from trying to direct market activity to being shaped by market desires. As the next piece in this series will show, this generally means more higher-density development. And most of this now caters to the desires of investors rather than owner-occupiers.

In other words, the creation of speculative profit, rather than the creation of homes, is now the primary driver of much higher-density development.

As a result, lower-income and disadvantaged households are being displaced to areas with poorer infrastructure. Furthermore, they are often forced to accept smaller dwellings of a lower standard.

Higher-density dwellings may offer attractive living opportunities in some parts of the city, but these are largely off limits to poorer households.

You can read other published articles in the series here.