Old Queenslanders in a New City

Old QueenslanderSupply Constraint

Looks like the Federal Government are getting around to dealing with one of the biggest issues in development, heritage restrictions.


More information about the problem here in Brisbane.


An old post of mine which was on Gene Tunny’s blog Queensland Economy Watch.


Recently, Brisbane’s Lord Mayor Graham Quirk said:

“A leading destination for business and investment, major events and international education, Brisbane is rapidly emerging as a diverse and energised global city with a $135 billion economy.”

Everyone in Brisbane has seen the Old Queenslanders in and around the city. However, you may not know these old buildings are protected by Council regulations. In October of 1995, Council introduced ‘Gray Tape’, a blanket layer of protection over suburbs where the majority of homes had been built before the end of World War II.

It is difficult to see how Brisbane can be a ‘global city’ when most of the population are forced to live in 100 year old wooden boxes. The argument is the old houses are historical and have ‘character’. Well horse and buggies are historical and have character but we are not forced to drive them to work every day. We have museums for these things.

When the rules were made to stop people knocking down the Old Queenslanders, Brisbane was still a small city. Now Brisbane is growing up and needs room for people to live in the city to be close to work. Maintaining the restrictions on development of land close to the CBD of Brisbane is pushing the price of each dwelling up to levels seen in New York and London. Land is limited by nature, but the number of dwellings on the land is limited by Council.

As an example the West End average house price for a renovated Old Queenslander is about $1 million. There are about 1,500 Old Queenslanders in West End at this time.  If half of these houses were able to be developed into high-rise residential apartments, at one apartment building per 6 houses, that would provide 125 new apartment buildings. There would be around 50 apartments in each building allowing an extra 6,250 families or about 15,500 people to live close to the city. The other half could be turned into townhouses and new parks. This could be repeated all around our city, brining a cosmopolitan lifestyle to our little city.

New apartment buildings cost about $30 million to build. Allowing developers to build 125 new buildings would provide a large boost to the economy of about $3.7 billion. Then all the families moving in to the new homes would buy furniture and spend in shops, providing much needed economic activity for the city. This sort of development could happen in Paddington, Red Hill, Spring Hill, New Farm, Highgate Hill, Kangaroo Point and East Brisbane. That is $30 billion added to the Queensland economy with no Government funding required.

Fewer people to move from outer suburbs will reduce the pressure on public transport, roads and the environment. More people living in the city would give the Government more money to spend on big events, arts and other entertainment.

Restrictions on building residential high-rise buildings in Brisbane have caused increased costs and long travel times to work, and they have reduced our standard of living and the growth of the economy. The Council restrictions mean fewer people can live close to work and, therefore, we need to pay for more roads, trains, buses and tunnels. The increased travel times to and from work take parents away from their families, increase pollution and reduce our productivity. If we cannot go up, we must go out, and that causes urban sprawl that impacts heavily on the environment.

If Brisbane really wants to become a World City, then we must stop listening to the vocal privileged few who are living in little wooden houses in the middle of the CBD and start developing new stylish homes for our workers. Removing the Grey Tape would allow development of Brisbane where six Old Queenslanders could make way for a block of units which could house hundreds of families.

If we want to keep some of the Old Queenslanders, let’s put them in a historic village out of the operational city of Brisbane. The people who like the old things can go to the historic village and ride horses around on the weekends. We can show our children the funny little houses we lived in before Brisbane was a real city.

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8 responses to “Old Queenslanders in a New City”

  1. Gene Tunny says :

    Great photo. Really shows how ridiculous the restrictions are.

  2. Cameron Murray (@Rumplestatskin) says :

    I don’t get it. Most major cities have similar or more severe heritage restrictions – pretty much every European city for example. Also, no one is forced to live in heritage houses near the city, just like no one is forced to live in new mcmansions in the outer suburbs.

    The West End example really makes the point. While there are 1500 old cottages, there is zoning for 20,000+ new apartments, and has been for nearly ten years now. So where are they all? Do you really think that changing some zoning for a few more thousand apartments and knocking down old houses will suddenly make the investment in new buildings more rapid? So rapid in fact that developers will start dropping prices to outcompete each other? It’s never happened before, so I can’t see it happening now.

    I recommend reading up on real options, which is the appropriate theory with which to analysis land markets. The basic idea is the value of land ownership lies partly in the option for future higher development, but exercising the option is a once off, irreversible decision – once you’ve built, you can’t unbuild afterwards. What this means is that land owners face a choice of WHEN to build. Their monopoly power allows them to withhold from development while the value of their land is increasing at a faster rate than what it would when the highest value use building is constructed.

    Here an AER paper making the point

    Click to access 950731.pdf

    “… a particular piece of land may be developed at the present data (if height restrictions are imposed), in circumstances under which it would not be developed otherwise.”

    Basically, if you impose development restrictions you reduce the land owner’s real option and their ability to delay investing in buildings.

    • bjreconomics says :

      Hi Cam

      Thank you for taking the time to reply to my post and taking an interest.

      Yes, lots of other places also have similar restrictions as Brisbane and they also suffer the negative effects. Large European cities are extremely expensive to live in and the Governments spent very large amounts on transport options to move people in and out of their historical villages. I suggest we try not to make the same mistakes as others and put historical objects in museums.

      Correct, no one is ‘forced’ to live in an old Queenslander but a person’s choices are limited. You can either live in an old Queenslander, small unit or move outside the historic village of Brisbane. The historic village of Brisbane has a radius of about 10km from the GPO. Therefore, if you want to live in a modern home you will have to travel long distances to get to work every day. This is not a problem if you do not have to travel to the CBD for work but many workers operate in the CBD. A worker who has to travel to the CBD may like to live closer to town if a suitable home can be purchased for a reasonable price. The worker living close to town will have more time to spend with their family and have minimal demand for transport to work.

      The alternative, which we now see in Brisbane is a worker has to purchase a home outside the historic village. These workers have to spend more time away from their family, have less productive time and increase the transport requirement. The increase in transport requirement increases the costs of providing public transport or road infrastructure. Instead of building a $5 billion tunnel just let people build lots of accommodation close to the CBD.
      Your point about West End having zoning for 20,000+ apartments is missing a point that the location of the approved area may not be suitable for what people want. There are many factors that drive investment in new buildings that are very complex and do not need to be investigated to know if you remove restrictions more buildings will be built. It is simple Econ101 stuff of a monopoly constrains supply and increases prices. The Council is the monopoly and they constrain supply to increase rates base, win favour with current electret (insiders) by increasing house prices and appeasing developer lobby groups.

      If you are correct that removing the restriction on the removal of heritage houses would not increase new development then there is no need for the restrictions.

      Developers will not have to reduce prices to compete with each other the prices may stay constant but reduce in real terms. Once restrictions are removed then the developer is more certain that in the future prices may come down not up. Therefore, it is better to build and sell now to maximise gains.

      Thank you for the paper on real options it is interesting. I have used real options in looking at water infrastructure and found it is a good way of demonstrating the effect of decisions to non-economists. The paper you sent actually talks a lot about the uncertainty of the future market and how with more certainty there will be more development. Brisbane has a history of creating uncertainty for developers as seen in the decision about Frew Park development. The Milton site was up for development since 2008, with council resuming the land for park development in 2011 after strong community opposition to numerous plans from private parties. This decision is an example of the worst kind of uncertainty for a developer. They spend a huge amount of money, time and effort trying to get a development approved only to have the land resumed by the Council. Then the Council goes and gives its self approval to build a new development on the land.

      We see this all over Brisbane where Council will restrict others developing or operating a private business then they open a Council business to meet demand. Not a great signal to investors to give them certainty and support.
      I think you got one point wrong about the real options, exercising the option is not a once off, irreversible decision. It is possible to remove a building, adjust size during construction or add to it later.

      The point you make about the developer withholding development while the value of their land is increasing at a faster rate than what it would after a building was constructed is exacerbated by the constraint on supply.

      Your last point was:
      Basically, if you impose development restrictions you reduce the land owner’s real option and their ability to delay investing in buildings.

      The problem with imposing development restrictions is the developer knows the restrictions will change in the future at which point they can sell the land at a much higher price as the value can be extracted through development.

      I have a lot more to say about this topic but don’t have time at the moment to fully explore all the issues. I hope I have explained my idea more fully in this explanation.

      Thank you for getting involved in the debate and sending me your thoughts. Please continue to help me explore the issues and comment on my blog.


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