Local councils’ involvement in planning infill development creates value for the residents

The objective of this paper is to understand whether greater involvement of local councils in the planning and development of the infills generate a better outcome for the residents as reflected through house prices. The Australian population is growing at a rapid rate and is expected to double by 2061. Two main approaches to tackle increasing population are the development of greenfields at the urban growth boundary and densification in the established areas (commonly known as infill). Given the limitation of greenfields development, infill has become popular. Many cities and metropolitan areas have established infill target. For example, in Sydney it is expected that by 2031 60% to 70% of the new dwellings will be supplied from in-fill. Similar targets have been set for other cities, for example, in Melbourne 61% by 2051, in Perth 47% by 2031 and in Adelaide 70% by 2040. Given such high level of infill targets it is important to manage the process in an integrated fashion as unplanned infill development could induce loss of green infrastructure and natural waterways. Local Councils play an important role by working with developers to achieve community goals and provide more public benefits to the residents. It timely to know to what extent their direct involvement in infill and residential development improve social welfare. Such information will contribute to more effective implementation of the infill project through an optimal level of involvement by local governments. Our case study consists of the Cities of Salisbury, Onkaparinga and Port Adelaide in South Australia. We use sales of homes built after 2000 following a subdivision. We classify infill developments by the three levels of involvement of the local council into the planning and development process. The “limited” level of involvement from the Councils is primarily reliant on policies of the Councils’ Development Plans. The “preliminary” level of involvement is related to high-level land division design and layout outcomes, such as connectivity to adjoining open space, road network, stormwater infrastructure. The “high” level of involvement from the Councils may, in addition, include rezoning to enable specific development policy to more explicitly guide development outcomes or design guidelines for dwellings design. We estimate a hedonic pricing model which includes spatial and temporal fixed effects, house characteristics, and a categorical variable that indicates the level of involvement of the Local Councils into the planning and development process. The preliminary result indicates that the “high” level of involvement of the Councils is associated with higher house prices in comparison with the subdivisions with “limited” or “preliminary” input by the Council. These results demonstrate the value of the Councils’ more active involvement with residential development.

Polyakov, Maksym & Iftekhar, Sayed & Fogarty, James, 2020. "Local councils’ involvement in planning infill development creates value for the residents," 2020 Conference (64th), February 12-14, 2020, Perth, Western Australia 305242, Australian Agricultural and Resource Economics Society.

Handle: RePEc:ags:aare20:305242
DOI: 10.22004/ag.econ.305242

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