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The key to unlocking medium density housing supply in Melbourne

Each week over 1,500 newcomers arrive in Melbourne wanting their own piece of the renowned ā€˜livableā€™ city. No wonder the pieces are becoming harder to get!

Research tells us half all recent employment growth is within 10 kilometres of the CBD. But half the new population growth lives much further out – more than 20 kilometres. And this is cementing a divide in Melbourneā€™s quality of life.

A few of the facts:

  • Less than 10% of job opportunities for residents on the city fringe are within a 45 minute drive.
  • 1 in 4 full-time workers spend more time travelling to and from work than they spend with their children.
  • If you have a full-time job more than 20 klms from the CBD, on average it will pay less than a job closer to the CBD ($56,000 compared to $77,000 a year).
  • It means Melbourne is becoming increasingly socio-economically and demographically segregated. All shaped by housing supply.

The solutionā€™s in the Middle Ring

Most property development in Melbourne comes in 2 types. Big apartment blocks near the CBD or stand-alone house and land on city fringes.
But thereā€™s rich opportunity for medium density housing options in the middle ring suburbs. This delivers proximity to employment plus sufficient family-friendly open space. And with public transport and commercial & retail facilities in place, thereā€™s far less environmental impact than with greenfield projects.

The challenges facing Middle Ring developers

The challenges facing middle ring development are significant. Itā€™s normal for existing residents in these zones to resist change. They worry about overlooking, busier streets and tree-lopping. But the city has to evolve.

The answer lies with good planning and blending new development with existing neighborhood character. New policies (Plan Melbourne) introduced in 2017 help support this.

De-politicise the assessment process

One hurdle is that planning assessment and approval at Council level is politicised and produces uncertain outcomes.

Elected councillors are often stuck between reflecting their voting constituentsā€™ conservative views, or supporting housing development that can invigorate neighbourhoods, bringing more business and income to the shire. Opportunities for even modest levels of new housing development are often nipped in the bud.

There are growing calls to de-politicise the approval process by having council officers, rather than elected councillors responsible for assessment of applications for development. Again, the answer lies with supportive planning policy, and easier processing structure.

Pathways for finance

Meeting new government policy placing 70% of all future housing development in existing suburbs brings some financing challenges. Bigger developers usually draw on established resources, but smaller developers are more reliant on banks and are therefore constrained at various stages of the development cycle depending on what the banks are willing to lend. There are more alternate funding arrangements available to developers that arenā€™t with the major lenders as they tighten borrowing requirements to protect shareholder interests

For more information about opportunities for townhouse development in Melbourne, SAW Constructions are glad to help. Just call us on (03) 9550 0700.