By Cara Waters
Melbourne Lord Mayor Nick Reece plans to abandon a housing affordability target he championed if reelected because it would lead to less development at a time when the economy is struggling.
Reece, who was promoted from deputy mayor in June, revealed his change of tack regarding the city’s “inclusionary zoning” framework at the YIMBY (Yes In My Back Yard) lord mayoral debate on Monday evening.
Lord Mayor Nick Reece during a talk for the lord mayoral candidates at Federation Square.Credit: Simon Schluter
Inclusionary zoning is a system that requires a proportion of social or affordable housing to be delivered as a condition of approval for larger housing projects. It is already used in the US, Europe, South Australia, the ACT and parts of NSW.
“I have been a supporter of inclusionary zoning in the past, but I do not think now is the right time for the introduction of inclusionary zoning,” Reece told the debate.
The Greens lord mayoral candidate Roxane Ingleton’s policy is for inclusionary zoning that requires 30 per cent of housing to be affordable in new developments on land owned by the council or the state, before it is sold to developers.
Last year Reece called on the state government to require all large apartment projects to adopt inclusionary zoning, a policy he said the council had been calling for since 2019.
“Other cities in Australia and overseas have proven that inclusionary zoning is a powerful policy tool to drive affordable housing development at scale,” Reece said at that time.
Reece told the debate the cost to build a new home in Melbourne was about $11,000 per square metre and it was sold by developers for about $15,000.
“The profit that can be made by the developer, when you take into account the project contribution that goes with it, is so slim at the moment that they’re not building,” he said. “That’s why projects aren’t starting in Melbourne at the moment.”
Reece said the City of Melbourne had approved close to 100 projects, comprising 16,000 new homes in total, which were yet to be built.
Lord Mayor Nick Reece during a talk for the Lord Mayoral candidates at Fed Square.Credit: Simon Schluter
“The developers, basically they’re Apex capitalists,” he said. “If they can make a dollar they’ll do it. If they can’t, they won’t. At the moment, they can’t make a dollar and so they’re not starting. So if you come along with a new impost, like a 30 per cent inclusionary zoning requirement for affordable housing, you will put further constraints on the supply of new housing.”
Reece also pushed back on Ingleton’s call to remove the Neighbourhood Residential Zone that imposes height restrictions on some parts of Melbourne.
“Will that add to housing supply in Melbourne? Not a scintilla,” he said. “What it will do is potentially wreck some of the most beautiful streetscapes in Melbourne.”
Instead, Reece called for more development in growth areas such as Arden and Fishermans Bend and the redevelopment of office buildings into residential housing, pointing to 80 buildings identified by the Property Council of Australia and Hassell architects as suitable for redevelopment which he said would deliver 4,000 homes.
Independent lord mayoral candidate and former Carlton footballer Anthony Koutoufides, who is heading the ‘Team Kouta’ ticket, also called for the conversion of office buildings into housing if there was a “bit of cream at the top for builders”.
However, the office buildings identified by Reece and Koutoufides are privately owned and none of the owners have agreed to convert the buildings.
Independent lord mayoral candidate Arron Wood said office conversions were “no panacea” for the housing crisis.
“What we know is that for a commercial building to transition into housing, it has to be at about 80 to 90 per cent of its value gone,” he said. “I’m not willing to put my hand up in Melbourne and say that our economy is that shot, that our commercial building sector is at 80 to 90 per cent of its value, because I can tell you we would be in a recession right now.”
Independent lord mayoral candidate Jamal Hakim said many of the office buildings identified were too expensive to convert to residential buildings because of their design.
“Housing is a right not a luxury,” he said. Hakim said he wanted to see well-designed housing built on council-owned land and for the council to advocate for social and public housing to the state and federal governments.
Ingleton told the debate that given the potential yield for developers on renewal areas like Arden, Egate and Dynon, which were yet to be sold to private developers, the Greens were confident the building finance would stack up.
“We say that the affordable housing rate in those areas should be 30 per cent, well below London’s 50 per cent, but in line with what developers can handle on newly-sold sites.”
A poll by YIMBY Melbourne of attendees at the debate saw a big swing away from Reece during the debate and towards Hakim.
Before the debate attendees were asked who they would vote for and 16.4 per cent said Reece, but this dropped to 2.9 per cent by the end of the debate. In contrast, 16.4 per cent said they would vote for Hakim which increased to 29.4 per cent following the debate.
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