Suburban resilience

As we enter the second year of the global financial crisis with Australia remaining reasonably resilient, we’ve heard a lot about high-end earners, those working in finance and consulting, being hit the hardest. People in these sectors tend to live and work near the “top end of town” and across inner metropolitan areas where rents and housing costs are high. John Black of Australian Development Strategies claims this is a trend that follows the last two recessions - “it hits the rich first and hardest”.

But with 72 per cent of people working 5km beyond the CBD, what of people who live and work in the suburbs or outer suburbs - is there a geography of economic impact and are some industries more resilient than others?

Initially a failure of financial institutions, the global financial crisis led to bailouts and cutbacks of high income earning employees. However, the impact on credit markets suddenly cut economic activity across all sectors worldwide. A painful consequence was job losses as affected companies restructured to sustain operations in the new era of less demand. Earlier in 2009, The Age reported dire warnings that “vast swathes” of the outer suburban mortgage belt are “red alert regions … vulnerable to rapidly increasing unemployment and disadvantage”, especially in Victoria and Queensland.

Bill Mitchell of the Centre for Full Employment and Equity the vulnerability of outer suburban residents is due to the high ratio of their employment in areas that will be hit hardest by a recession, namely construction and light manufacturing. But this doesn’t seem to be the case given the types of casualties we’ve seen so far. While other sectors are responding to fallen demand, the finance sector in particular is also exposed to significant lasting structural change.

Property prices in the suburban and outer suburban mortgage belts have proven to be more resilient than inner urban counterparts. As lending criteria tighten, expensive inner urban real estate is more difficult to buy, and cheaper, bigger, new outer suburban properties become more attractive, so demand remains stable there. According to Domain’s Alex Brooks, in Frankston (an outer suburb of Melbourne), median home prices have remained constant whereas Toorak prices have fallen by 24 per cent in the first half of 2009. Similarly median home prices in the outer Brisbane suburb of Logan have fallen 2 per cent compared to the affluent inner suburb of Hamilton, where prices have dropped by a staggering 66 per cent.

The government’s initiative of trebling the First Home Owners Grant has clearly added to the sale of affordable houses, typically located in outer suburban localities. For those suffering job losses, the cost of sustaining mortgages might be more manageable in suburban areas where housing costs are lower compared to debt on inner city properties.

Can we assume that employment in the outer suburbs has proven as resilient as their housing values following a similar trend? A national team of researchers from Monash University and Queensland University of Technology have been investigating design and arts based creative industries workers in outer suburban areas of Brisbane and Melbourne. Funded by the Australian Research Council’s Discovery scheme, the study investigates the types and experience of professional creative activity occurring beyond the inner-city. Researchers have found significant evidence of professional creative activity in outer suburban localities. The key assets of creative industries are ideas and people who “create something from nothing”, and practitioners may be more resilient in the face of a recession, particularly if located in outer suburban areas where overheads are low.

Most creative sectors are SMEs (small to medium enterprises), employ less than 20 people, tend to be light on infrastructure and are more responsive to market conditions than industries whose large organisational structure makes them cumbersome and slow to change. So size matters. Most suburban creative workers in the study work in small companies and some are solo operators. Researchers have found that many participants have not been adversely effected by the recession and those people finding demand has dropped for their products or services have been able to handle the downturn. This could point to several factors - the lower cost of overheads in suburban locations, lower lifestyle costs and the overall resilience of the sector. Many arts based workers are used to living with uneven incomes, while people with small businesses, if debt and overheads are low, are able to respond efficiently to market fluctuations.

Another school of thought that supports the resilience of creative workers is that as we bunker down and spend less money on going out and purchasing, we still spend on leisure, work and education. These sectors are all dependent on the products and services of the creative sectors. On a daily basis we consume relatively low cost digital services, read papers, use computers, listen to music and radio, use software, watch television and go to the cinema - all activities most likely to be maintained, if not increased during a recession.

We know that culture and creativity animates the places in which their activities occur, contributing to their appeal and use. The locality of creative workers living and working beyond the CBD and inner-city has planning implications for the types of infrastructure that might support the economic and social sustainability of suburban localities. Re-imagining the suburbs as productive places where creativity might prosper, rather than accepting the familiar view that they are passive places of retreat, is a step towards developing sustainable suburban communities.