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Labour market, housing market interdependence within metropolitan Australia: a case study of Melbourne

Summary

Project Number: 50024
Research Theme: Economics_Modelling
Project Leader: O'Connor, Kevin
Funding Year: 2000
Research Centre: Swinburne-Monash

Research & Policy Bulletin

Issue 005: The links between housing markets and labour markets in Melbourne

This research set out to identify the links between housing markets and labour markets within the Melbourne metropolitan area. In many recent analyses of metropolitan development, the emphasis has been upon population, especially population location and density. However, the growth and location of jobs may be just as important in shaping metropolitan development. A key aim of this study was to assess the ways in which the geography of employment shapes metropolitan development.

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Description

The character and vitality of housing markets in metropolitan areas has changed in the last few years, with big shifts toward large scale estates and larger houses in fringe locations, as well as in-fill on mid-suburban sites and inner area higher density development. At the same time it has become apparent that large areas of the suburbs have been left behind, maintaining low house prices and poor social circumstances. That new set of outcomes is very different from a previous era when all the growth occurred at the fringe, and many of the social problems were commonly associated with inner area decline. The core idea of this project was that the new pattern reflected new circumstances in the labour market, and new attitudes to links between job location and housing site selection. These new dimensions include a change toward higher skilled professional jobs in a range of sectors (and hence locations). They also involve changes in housing preferences, which for some has favoured smaller inner area buildings, while for others has favoured new large houses in middle and outer areas. That core idea was explored by an analysis of travel to work and residential re-location information for different areas and different types of jobs.

The analysis aimed to show the extent to which local housing market trends are linked to changes in the character of local labour markets. The work was carried out in Melbourne, in part as a means of refining the methodology, but also to take advantage of the substantial local knowledge of the character of this housing and labour market developed by the project leader. As part of the research, some attention was paid to Brisbane as a test of the methods in a different set of circumstances. It was anticipated that once the methods and techniques had been refined they could be applied to other Australian cities in a subsequent project.

The analysis has policy significance as it has the potential to allow a re-interpretation of metropolitan development trends. For a considerable period these have been assigned the title "urban sprawl" and the basic objective of government has been to reduce the rate and scale of sprawl by a policy broadly termed urban consolidation. However it is possible that the underlying pattern of development is not one of sprawl at all, but involves a careful balance between job and housing accessibility. That perspective has been exposed in US and UK analyses of similar issues. If that is the case in Australian cities, the focus of attention in the management of housing and spatial development generally in metropolitan areas may need to shift away from the fringe and from the inner area toward the middle suburban locations. These areas have the capacity to provide the jobs (on more intensive development of old industrial sites) which may be linked to housing nearby, or in outer suburbs. Getting this perspective clear will provide a framework that may be able to provide better approaches to housing and job development. Those different approaches will be needed not only to address the areas that have been bypassed in the recent changes, but also as a very large generation of younger people currently growing up in outer suburbs enter the labour market over the next decade.

More Information

Positioning Paper: No. 017: The links between housing markets and labour markets
314 KB PDF Document

Final Report: No. 010: The links between labour markets and housing markets in Melbourne
326 KB PDF Document

Research and Policy Bulletin: Issue 005: The links between housing markets and labour markets in Melbourne
80 KB PDF Document