Goodbye flats, hello mansion: Apartments demolished despite state’s housing goals

Blocks of apartments are being sold and razed to make way for luxury mansions in desirable inner suburbs, despite the state government’s ambitions for increased housing density in Melbourne.

The Age has seen multiple examples of walk-up flats in the bayside municipality of Port Phillip being converted to a single large home – a trend which has prompted planners to call on the Allan government to establish new controls preventing cases of net dwelling loss if it is serious about its housing goals.

Former Port Phillip councillor Marcus Pearl outside a block of flats on Hambleton Street, Albert Park that are set to be bulldozed for a single luxury house.Credit: Jason South

In one case, a block of five brick flats at Hambleton Street, Albert Park, was sold in July along with approved plans for demolition and an opulent new $2.7 million home.

Nearby, on a 1000-square-metre block at Richardson Street, a modern mansion sits where 17 apartments once stood.

A block of nine flats in Merton Street sold last month for $4.22 million to a buyer intending to replace them with one large home or three modern apartments.

In Nelson Road, South Melbourne, a group of neighbours is challenging an approved plan to knock down six apartments and build a $2 million luxury house through the Victorian Civil and Administrative Tribunal.

The Age has seen a copy of Port Phillip Council’s submission to Plan for Victoria, a development road map the government is preparing to unveil in December.

The council warns it has received several applications to convert multi-dwelling blocks into single homes.

“This consolidation of multiple dwellings is further contributing to the housing affordability crisis and reducing dwelling numbers,” the document said.

“This emerging trend should be monitored across Melbourne to establish whether a planning response is warranted.”

Every day last week, the government unveiled new housing policies to strengthen its goal to build 80,000 new homes per year.

New rules were also introduced last year to unclog the planning system by making it easier for single dwellings to be developed without a planning permit on lots larger than 300 square metres, or fast-tracked for smaller blocks.

Patrick Fensham, president of the Planning Institute of Australia’s Victorian division, said the problem of several dwellings being bulldozed for a single house could be solved by prohibiting planning applications that result in a loss of homes.

The block of nine flats that sold in September at Merton Street, Albert Park.Credit: Jason South

In New South Wales, the City of Sydney and beachside Waverley Council want to stop apartment blocks from being torn down for large homes with a rule that any building proposal should not reduce the number of dwellings by more than 15 per cent.

“At a time when we’re looking to get as much housing as we can in established areas in good locations, if there is a net loss of dwellings on any particular site then that’s a very disappointing outcome,” Fensham said.

Stephen Rowley, who wrote The Victorian Planning System textbook, said while the issue was unlikely to cause a huge dent in the state’s overall housing supply, it was “particularly unfortunate” and could be easily fixed by the planning minister.

“The state is massively changing rules to facilitate development and the assumption behind that is we get extra housing supply, but if in some examples we’re getting a mega single house, at an individual level it’s a bad outcome,” Rowley said.

Port Phillip’s former deputy mayor and Labor council candidate Louise Crawford said the municipality needed to have a diversity of housing to suit people at different life stages, including downsizing residents.

“We want this municipality to be for everyone, not just for those who are lucky enough to be really wealthy,” she said.

Former Liberal councillor Marcus Pearl said entire apartment blocks were being sold off in larger numbers, with landlords struggling with higher land taxes and interest rates.

“I respect individual property and heritage rights, but if we don’t tackle this head-on, we risk losing the housing supply and the character of our inner-city areas,” he said.

Census data shows the populations of suburbs such as Albert Park and Middle Park fell by about 3 per cent in the five years to 2021.

Across Port Phillip, the number of residents grew by just 1 per cent – a significantly slower pace than Greater Melbourne, where the population rose by almost 10 per cent.

Oliver Bruce, director of real estate agency Marshall White Port Phillip, said he had noticed more apartment blocks or two side-by-side properties being merged into one title.

“It’s an area where there is no more land being made [available], but also there’s a shortage of bigger homes or parcels of land where people want to call home.”

A spokesman for Planning Minister Sonya Kilkenny said 5700 dwellings, mostly apartments, were approved in the last five years in Port Phillip.

“Landowners have always been able to redevelop land at a lower density, but these cases are few and far between – the vast majority of building approvals across Port Phillip are high-rise and medium-rise apartments,” he said.

He added that the government was also reviewing how planning and building systems can be streamlined, enabling more people to add a second home, build two new homes, or subdivide a block into two lots.

City of Port Phillip chief executive Chris Carroll said the council’s planning officers did not have the authority to stop multi-dwelling blocks from being consolidated into a single home.

In cases where a planning permit is required due to a special overlay on a property, such as a heritage overlay, the council’s assessment must be limited to the considerations of the heritage policy.

Carroll said the council had highlighted the trend to the state government but had not yet formally resolved a position on whether new controls would be appropriate.

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