In The Age over the weekend, several groups including the Planning Institute of Australia and Urban Design Forum called on the Victorian Government to adopt floor area ratios, and limit the number of extra homes that could be built in Activity Centres.
The suggestion was that we could learn from the New South Wales planning system, which the voices in the article seemed to believe is superior to Victoria's.
If the goal is more expensive housing, then NSW is an excellent blueprint for reform. Rents in Sydney are 30% higher than Melbourne; prices are a staggering 50% higher. According to the National Housing Supply and Affordability Council, over the past five years New South Wales built 251,000 new homes; Victoria built 306,000—the most in the country.
But if the goal is housing affordability and abundance for all Victorians, then NSW should be taken as what it is: a warning.
It is a warning Victoria should heed.
We should begin by asking: why are fewer homes built in Sydney than Melbourne?
We know that people want to live in Sydney. For reasons loyal Melburnians like ourselves cannot quite ascertain, they will pay 30-50% premiums to do so. But why do those premiums exist?
The answer is that state and local governments in New South Wales make it very hard to build.
The Age's article featured some amount of praise for New South Wales's use of floor area ratio (FAR) controls. These controls are used to limit the amount of floorspace a given lot can provide for people who might want to live there.
Restrictive FARs in Sydney are a big reason why its recent planning reforms will be less effective than Victoria's equivalent.
Let's take a real-world example.
The award-winning and beloved Nightingale Village has a FAR of around 5.5. It is built right by a train station, and has won many design and development awards.
The maximum FAR permitted around train stations in Sydney is 2.5. Up north in the harbour city, you are not allowed to build even half a Nightingale Village.
Where a height limit might be argued to combat outcomes like overshadowing, FAR has no purpose beyond limiting housing in the places where people most want to live. It is designed to arbitrarily and explicitly restrict how much is built. When planners choose a FAR of 2.5 instead of 5.5, they are making an explicit choice to restrict housing supply. And when YIMBY movements talk about the problems of planning regulation, these are the kinds of arbitrary rules we mean.
Regulation should solve social problems. These might include health and safety risks, and ensuring the provision of key infrastructure. But by arbitrarily regulating density, planners regularly make the implicit antisocial claim that the problem to be solved is other people.
But other people are not a problem to be solved. Other people, rather, are what makes Melbourne such a phenomenal place to live. We need a regulatory system that celebrates that, and which does not make it harder for people to live here.
Rather than a guide, Sydney offers us a cautionary tale. We should think twice before we follow in their footsteps.