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Charts 1 & 2 demonstrate the shift of persons with higher education and in managerial and professional occupations into these previously less desirable areas. This coupling has seen these people demand higher incomes which have grown at a faster rate than Melbourne’s average, as shown in Chart 3. This has been a real catalyst for the gentrification of the aforementioned suburbs. • Fastest National Population growth has lead to housing demand outstripping supply. • Negative Gearing and Land tax policies strongly favour home owners and minimise their tax exposure. • First Home Owners grant has driven up values instead of subsidising them. • Only 5% of money loaned for investment went towards construction of new dwellings. REASONS HOUSING PRICE GROWTH HAVE VASTLY OUTSTRIPPED INCOMES • Higher incomes in more centralised areas are stimulating the gentrification of Melbourne. • Landlords in gentrifying areas are favouring skilled migrants on higher incomes over unskilled low income earners. • There is a link between persons holding degrees, earning higher incomes and living in more centralised areas because of their higher purchasing power. • Higher level professionals gentrifying these central areas and displacing unskilled/less skilled workers. HOUSING AFFORDABILITY MEDIAN INCOME MAP * (Residents aged 25-65). Melbourne, 2011. * * Sourced from ABS data Following the rise of gentrification during the 1970s within the inner city suburbs of Melbourne the process has continued at a steady spread creeping further into the inner northern and western suburbs of Melbourne. This process is continuing to have a drastic effect not only on housing affordability but also in shaping the neighbourhood character and new development within inner-city suburbs. The policy and planning response to the rapid demographic and economic changes of gentrification have seen an in depth integration between numerous levels of government. Development of urban and social policy was also divided between the statutory authorities of the Victorian government, the Melbourne City Council and numerous small municipalities in the metropolitan area (Colic-Peisker 2014). • The deindustrialisation of Melbourne during the 1970s was one of the main catalysts for inner-city gentrification and • “Between 1971 and 2001 Melbourne’s inner core region lost more than 70 per cent of its manufacturing jobs, down from almost 118,000 to just under 37,000” (O’Hanlon and Hamnett 2009). • A boom had occurred by 2001 and more than one-third of Melbourne industry jobs were now in the financial, business and insurance sectors Looking forward, further integration needs to be established between state government planning departments and local government councils to ensure preservation of existing neighbourhood character within these regions and to monitor the spread of gentrification. WHAT’S GENTRIFYING MELBOURNE? CATALYSTS OCCUPATIONAL SHIFTS Gentrification has commonly been referred to as the the neighbourhood evolutionary process in which more affluent and often young households move into upgraded distressed neighbourhoods with many of the neighbourhoods original residents being displaced. Displacement can be stimulated by gentrification when there are increased demands on the housing market in a specific area leading to increases in rents, housing values and associated costs that ultimately push out the low income earners over time. As new residents move in, the original residents are displaced into more affordable areas to them. The social cost of displacement is often very high however and people tend to ‘hang on’ to their lifestyles often forcing them to live below their previous means. There is very minimal evidence that highlights gentrification even being a prime factors in the increases the level of social mix in a specific neighbourhood. The relationship of gentrification to crime is highly problematic. Central neighbourhoods have typically been the most dangerous of all, especially those scarred with the physical deterioration. WHAT IS GENTRIFICATION? CHART 1 * CHART 3 * CHART 2 * % OF PERSONS IN MANAGERIAL OR PROFESSIONAL OCCUPATIONS % OF OCCUPANTS WHO HAVE BACHLOR DEGREES AVERAGE HOUSEHOLD INCOME * 2013 * Sourced from Grattan Institute 2013 * Sourced from ABS data School of Property, Construction and Project Management Kai Recht | Cameron Hord | Matt Leardi | Stephen Land MEDIAN VS AVERAGE ANNUAL INCOME RATIO Median VS Average Annual Income Ratio * Sourced from ABS data *
