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The link between compact urban form and housing affordability in Indonesia: Where is the empirical evidence? Author Dewita, Y, Yen, BTH, Burke, M Published 2018 Conference Title 2018 Joint Asia-Pacific Network for Housing Research and Australasian Housing Researchers Conference: Conference Proceedings Version Version of Record (VoR) Copyright Statement After all reasonable attempts to contact the copyright owner, this work was published in good faith in interests of the digital preservation of academic scholarship. Please contact [email protected] with any questions or concerns. Downloaded from http://hdl.handle.net/10072/402078 Link to published version https://www.griffith.edu.au/cities-research-institute/news-and-events/seminars-and-events/2018- joint-apnhr-and-ahrc-conference Griffith Research Online https://research-repository.griffith.edu.au 2018 Joint Asia-Pacific Network for Housing Research and Australasian Housing Researchers Conference Griffith University, Gold Coast, Australia, June 6-8 2018 THE LINK BETWEEN COMPACT URBAN FORM AND HOUSING AFFORDABILITY IN INDONESIA: WHERE IS THE EMPIRICAL EVIDENCE? Yulia Dewita Cities Research Institute, Griffith University, Brisbane, Australia Barbara T.H. Yen Griffith School of Engineering and Built Environment, Griffith University, Gold Coast, Australia Matthew Burke Cities Research Institute, Griffith University, Brisbane, Australia Abstract Urban consolidation has become an urban planning and development paradox. One of its recurrent criticisms relates to housing affordability and the role of planning interventions such as compact city policies. Indonesia has adopted the compact city concept in recent years, but there is little knowledge of density’s effects. This paper examines whether housing and transport affordability is associated with urban compaction in three Indonesian metropolises. Twenty-two municipalities within Jakarta, Bandung, and the Medan metropolitan areas were studied. National socio-economic survey data were used to measure affordability, while census and statistical data are used to describe the current state of urban compactness in each municipality. Data envelopment analysis (DEA) methods were applied to provide an objective calculation and benchmarking process to evaluate and perform the inter-city comparison of the combined housing and transport affordability. To discover the relationship between affordability and urban compaction this study uses Tobit regression analysis. The results support the argument that urban compaction has a potential to improve housing affordability, particularly when transport and housing costs are combined. The research sheds new light on the link between compact urban form and housing affordability in the developing countries context. Keywords: Compact city; Housing; Transport; Affordability; Data envelopment analysis (DEA); Indonesia. Yulia Dewita is a PhD student in the Cities Research Institute, Griffith University. Her research is about the relationship between compact city and housing affordability. She has 20 years of work experience at the West-Java Provincial Government in Indonesia. Barbara T.H. Yen is a lecturer in Transport Engineering at Griffith School of Engineering and Built Environment. She specialises in transportation economics and engineering. She has published widely and involve in many research grant projects. Matthew Burke is an Associate Professor and Principal Research Fellow in the Cities Research Institute, Griffith University. He is the main coordinator of Griffith’s transport research team and specialises in transport and land use, public and active transport. 284 INTRODUCTION Compact city policies that promote higher densities are being implemented to promote sustainability and limit urban sprawl. Amongst many claimed benefits, compact urban form helps preserve rural and agricultural land (Clark and Tsai 2000; Llewelyn-Davies 1994), lowers car-dependent travel demand, reduces fuel consumption and emissions (Masnavi 2000; Newman and Kenworthy 2000; Thomas and Cousins 1996), and promotes better access to urban services and facilities (Bramley and Power 2009; Burton 2000b; Kaido 2006). On the other hand, disadvantages of such policies include poorer access to green space, increased crime levels, higher risk of respiratory disease, less domestic living space, and lack of affordable housing (Burton 2000b). Empirical evidence of the link between urban compaction and sustainability is inconclusive. The most ambiguous is the claim that the compact city is socially equitable (Burton 2003). Housing is, perhaps, the area in urban planning that has the greatest social effects (Levy 2003). It has been suggested that some urban compaction strategies (e.g. urban growth boundaries) will limit developable land and housing supply, thereby increasing housing prices and reducing affordability (Addison et al. 2013). Yet, several studies have revealed that policies such as growth boundaries had no significant impact on housing prices (Downs 2002; Jun 2006; Phillips and Goodstein 2000). Higher land prices in contained urban areas should not harm affordability providing housing supply and demand is balanced. Furthermore, recent research contends that true affordability is not merely based on housing cost (CTOD and CNT 2006). Incorporating transport cost in housing affordability calculations produces a more accurate portrait of a household’s burden in fulfilling their housing needs and suggests that affordability decreases as the distance from the city centre increases (Buchanan et al. 2005; Haas et al. 2006; Vidyattama et al. 2012; Yates and Gabriel 2006). Despite the multifaceted relationships between urban form and sustainability, cities with compact urban form are often perceived as more sustainable than dispersed cities. On these grounds, political support for implementing compact development policy is evidenced in both developed and developing countries (Burton 2000b; Burton et al. 1996; Jenks and Burgess 2000). Thus, it is important to consider the implementation of compact city policy in the context of emerging economies. In this regard, Indonesia—the fourth most populous country in the world— is a useful location to explore relationships between compaction, housing and transport affordability. Distinct differences exist between Indonesian cities and Western cities. In Indonesia, the existing population density is already high, urban infrastructure investments are limited, a high level of mixed land-use is apparent, and there is a combination of low mass public transport use and high motorcycle use. This paper examines whether urban compaction affects overall housing affordability in the three Indonesian metropolitan regions of Jakarta, Bandung, and Medan. The objective is twofold: (1) to analyse housing and transport affordability, and (2) to examine whether greater compactness relates to housing and transport affordability. We use the data envelopment analysis (DEA) method to measure and perform an inter-city comparison of housing and transport affordability. To discover the relationship between affordability and compactness, this study uses the Tobit regression analysis. The structure of this paper consists of five sections. Section 2 provides an overview of the three selected case studies. Section 3 explains the research design and methodology, and the discussion of research findings is in section 4. Section 5 outlines the contributions, as well as research limitations and potential future research. 285 URBAN FORM, HOUSING AND TRANSPORT IN INDONESIAN METROPOLISES The three case studies of the Jakarta Metropolitan Area (JMA), Bandung Metropolitan Area (BMA), and Medan Metropolitan Area (MMA) were among metropolitan areas listed as the national strategic area (KSN) in Indonesia. The JMA represents the megalopolis, with its greater than 10 million population; the BMA a large metropolitan area (5–10 million population); and the MMA a metropolitan area with (<5 million population) (World Bank, 2012). The JMA comprises of 13 municipalities (5 in the core, 8 in the periphery), while the BMA comprises of 5 municipalities (2 in core, 3 in the periphery) and the MMA of 4 municipalities (1 in core, 3 in the periphery). As one of the largest countries by population, Indonesia faces a rapid urbanisation. The proportion of urban dwellers in Indonesia has increased significantly from only 22.3% in 1980 to 30.9% in 1990, 42% in 2000, and 49.8% in 2010 (Badan Pusat Statistik 2002, 2010). Rapid development and urban area expansion is evident in both the JMA and BMA, with the MMA also expanding, albeit at a slower pace. In recent years, Indonesia has adopted the compact city approach to curb urban sprawl; yet, no city in Indonesia can be categorised as a compact city. Populations in the peri-urban areas increase faster than within the cores. (Kustiwan 2010; Winarso et al. 2015; World Bank 2012). New forms of settlement are also apparent, with density in suburban locations more common. A recent study of land use changes in the JMA demonstrated that over 2012–2017, the growth of high-density settlement shifted to the outer areas, where municipalities such as Tangerang, Bogor, and Bekasi Regencies experienced growth rates about three to four times higher than Jakarta in the core (Wahyudi et al. 2018). The trend towards mixed-use and higher density development occurs not only in the city centre but also in suburban areas, particularly in the JMA and BMA. This development creates a more polycentric metropolitan region