Strategic land supply policy
Fifteen years of land supply
Clause 11.02-1S of the State Planning Policy Framework of the planning scheme identifies the need to “Plan to accommodate projected population growth over at least a 15-year period and provide clear direction on locations where growth should occur.” Greenfield supply is one element of the land required to provide dwellings to service population growth. Supply is also provided through development on major redevelopment sites (10 or more dwellings) and infill development.
Unlike the location of future greenfield development, which has been identified through a range of strategic planning documents, the horizon for major redevelopment sites is shorter. Given the short-term nature of identifying major redevelopment sites, an assessment of the number of years of supply for major redevelopment sites cannot be made using site-specific information. However, monitoring of major redevelopment sites over a number of years indicates that the market identifies new opportunities.
Plan Melbourne 70:30 aspiration
Policy 2.1.2 of Plan Melbourne sets an aspirational scenario where 70% of net additional dwellings are located within established Melbourne and 30% in the growth areas. The 70:30 aspirational scenario is designed around a sustained change over a long time period. It is anticipated the share of new dwellings being built in the growth areas will decrease over time as greenfield land is consumed and development increases in the established parts of Melbourne.
The share of net additional dwellings in the established areas of Melbourne has approached 70%. Since 2016, the share of dwelling approvals occurring in the established parts of Melbourne have declined from 64% to 54% in 2019. This decline can be attributed to continued strong greenfield development.
Share of net additional dwellings, established Melbourne and growth areas, 2012 to 2020
Development facilitation program
The Victorian Government has identified Victoria’s building and construction sector as a key mechanism to revitalise Victoria’s economy during the coronavirus (COVID-19) pandemic. Builders, constructors and developers are grappling with unseen conditions in delivering projects that would otherwise have run to schedule and without disruption.
Following the success of the Building Victoria’s Recovery Taskforce (BVRT) Priority Project Fast-Track pilot program, the Minister for Planning has established a fifteen-month Development Facilitation Program within the Department of Environment, Land, Water and Planning (DELWP) to speed up the assessment and determination of identified priority projects that will:
- deliver investment into the Victorian economy
- keep people in jobs; and
- provide a substantial public benefit
Approved projects meeting the criteria of the greenfield or redevelopment Urban Development Program will be included when detailed planning and delivery occur and tracked through the development pipeline.
The Victorian Budget 2020/21 provides $38 million to improve planning processes, as recommended by the Commissioner for Better Regulation, streamlining decision-making and giving the private sector greater certainty to invest, create jobs and bring their business to Victoria.
More Victorians are choosing apartments to be their homes because of affordability, convenience and accessibility. To look after our city’s liveability, the Victorian Government committed to updating the planning rules to create better apartments in our neighbourhoods. The Better Apartments Design Standards have been updated to implement the Victorian Government’s election commitment to improve the external amenity of apartment buildings.
Population growth prospects
Population growth is a key factor in the development of new housing. Before the coronavirus (COVID-19) pandemic, Victoria was the fastest growing state in Australia, reflecting its attractiveness as a place to live, work and study. However, the coronavirus (COVID-19) pandemic has had a negative impact on population growth.
As outlined in the Victorian Budget 2020/21 (Budget Paper 2 – Strategy and Outlook):
Victoria’s population is forecast to be unchanged in 2020-21, before growing by 0.3 per cent over 2021-22. As national borders reopen, and confidence in the economic outlook improves, population growth is expected to slowly pick up, to reach around 1.7 per cent by 2023-24. Nevertheless, this remains below the average annual growth rate of 2.3 per cent over the five years before the coronavirus (COVID-19) pandemic.
Victoria in Future is the official state government projection of population and households. Projections are based on trends and assumptions for births, life expectancy, migration, and living arrangements across Victoria.
Current housing activity
The growth area Local Government Area’s (LGA) have recently experienced record high approvals for detached houses with 21,169 building approvals in 2020. A record 14,495 dwellings were approved in the growth area LGAs for six months to 30 June 2021. The National Housing Finance and Investment Corporation suggests housing investment was brought forward due to government financial incentives. The Commonwealth Government extended applications for the HomeBuilder Program to 14 April 2021.
Dwelling approvals in the established parts of Melbourne have declined since 2017 (the last peak), when 36,660 dwellings were approved. A total of 24,525 dwellings were approved in 2020 within the established parts of Melbourne which is slightly less than the 25,734 dwellings approved in 2019. In 2020, dwelling approvals in middle and outer Melbourne LGAs declined compared to 2019, while approvals in inner Melbourne increased by a thousand dwellings.
At December 2020, there were around 162,400 dwellings on major residential redevelopment sites that were either under construction or in the development pipeline. 79% of dwellings proposed for major redevelopment sites are expected to be built in buildings of four or more storeys.