With 80 per cent of Australians living in cities or suburbs, this question is more important than ever.

We are at the dawn of a new era of "neuro-architecture", in which psychological insights are changing the way we think about town planning, urban design, and even the interior design of our homes.

Research from a diverse array of disciplines including architecture, design, psychology, neuroscience and environmental science is contributing to a growing body of evidence that shows that the built environment we inhabit significantly affects our wellbeing.

In his 1958 book The Living City, famed American architect Frank Lloyd Wright argued that "all fine architectural values are human values, else not valuable". Half a century on it's a philosophy that, with both high-density living and social isolation on the rise, is more important than ever. This is where "placemakers" such as Gilbert Rochecouste come in.

With a background in psychology, Rochecouste founded placemaking company Village Well in Melbourne in 1992, and has since worked with local governments, businesses and communities to "reactivate" more than 1000 cities and towns around Australia.

"Placemaking in its essence is creating meaningful places that people love and want to protect and nourish," Rochecouste says.

It has since grown to become a larger movement that seeks to bring a holistic approach to creating community and providing people with a sense of connection to the environment they live and work in.

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"We realised we were creating beautiful places and environments. And it wasn't just about public art, it was creating places that people wanted to hang out in," Rochecouste says.

In the early 1990s, Rochecouste worked with the City of Melbourne to help transform the city from what was then a dull metropolis into the vibrant cultural hub it is today.

"The City of Melbourne understood what we were doing had a community benefit and a social benefit," he says.

For Rochecouste, urban design that cultivates the unique "personality traits" of a city is particularly important for inhabitants.

"We are sensorial beings in terms of taste, touch, sound, movement. Each place has a specific bioregion, and has a bioregional effect on our body," he says. "You take Sydney and Melbourne as a classic example. Sydney is much more out there, open, and Melbourne is much more inner, which is shown in its laneways, its hidden places, its cafes.

"Each city's personality is different and these factors affect our psychological wellbeing, which is where placemaking is important."

While studies show that 21st-century city life can lead to a host of mental-health issues, there is also evidence that these negative effects can be mitigated by urban design that not only revitalises public spaces and restores community spirit, but also provides access to nature in the form of green spaces.

Anne Cleary is a nature and health researcher at Griffith University's School of Medicine who studies the ways in which people benefit from experiencing nature.

"There's a lot of literature and research showing the ways in which people benefit mentally from exposure to nature in urban environments, which can be quite stressful with crowds and traffic and everything else," Cleary says. "It's really important that we have these kinds of green spaces as a respite from the urban environment."

Studies in stress recovery and attention restoration have shown that exposure to nature facilitates faster recovery from health problems and the stresses of daily life.

"Natural landscapes lend themselves particularly well to satisfying the characteristics of a restorative landscape. They are the kind of psychological pathways through which we get this wellbeing benefit," Cleary says. "We need restorative landscapes when we are a bit mentally fatigued or stressed."

If you live in a city or suburb sorely lacking in green spaces, don't despair. It's easy to create an environment that allows you to connect with nature in your own home.

"You need to work out what's best for you. Whether it's having a little herb garden in your apartment or volunteering at your local bush care group or even just doing bird watching," Cleary says. "There are different ways you can bring nature into your life. You just have to figure out what best resonates with you."