Policy report

Local residents often oppose new apartment buildings on the grounds that they would harm neighbourhood character. This paper suggests these concerns are overstated.

The paper examines several examples of high-rise development in Sydney: Chatswood, Forest Lodge, Green Square, Liverpool and Turrella. If these developments harmed neighbourhood character, as local residents often claim, nearby house prices should fall. But that does not happen. Instead, house prices in each suburb closely track the prices of houses in adjoining suburbs – both before and after the development.

This implies that high-rise apartments have little effect on neighbourhood amenity.  A secondary implication is that houses in adjacent suburbs are very close substitutes.

These results have policy implications. Many zoning regulations restrict the supply of new apartments, raising the cost of housing. The paper suggests that these regulations are hard to justify in terms of preserving local amenity. Zoning regulations appear to increase the cost of housing unnecessarily.

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CIS Policy Paper 40