Housing targets scaled back across Melbourne

The state government has wound back housing targets for Melbourne council areas by almost a quarter-of-a-million homes, and some areas have been told to plan for almost half as many new dwellings as they were ordered to eight months ago.

After a year of consultation with councils and locals, the government has also released a major recalibration of its ambitious housing plans announced over the past 18 months, including scaled-back plans for 10 “activity centres”.

It has now lowered the approval target for all metropolitan councils from a collective 2 million extra homes by 2051 to 1.78 million. Homes may be individual units or stand-alone houses.

Nillumbik, Hobsons Bay, Manningham, Mornington Peninsula and Hume have had the largest drop in their targets since the 2051 targets were announced in June.

Nillumbik was last year ordered to accommodate permits for 12,000 new homes by 2051. That target has dropped by 45 per cent to 6500. Hobsons Bay’s target has dropped by 27 per cent to 22,500. Manningham’s has dropped by 27 per cent to 38,500. Mornington Peninsula’s target dropped by 7000 dwellings (or 23 per cent), and Hume’s target dropped by 19,000 (or 19 per cent).

The Melbourne councils that had the least change in their targets were Port Phillip, Stonnington, Maribyrnong, Boroondara and Glen Eira, where the targets reduced slightly, between 1.8 per cent and 2.3 per cent.

In announcing the scaled-back height limits for activity centres, foreshadowed in The Sunday Age, the government took aim at traditionally Liberal-dominated and largely heritage-protected councils and areas like Boroondara and Bayside, where local Liberal MP and now-shadow treasurer James Newbury organised a highly publicised rally of locals against density in Brighton last year.

“You don’t get more affordable homes built by running up and down the main street of Brighton with a megaphone blocking more homes being built,” Premier Jacinta Allan said on Sunday.

Tweaked mapping plans for seven more redeveloped activity centres were also revealed on Sunday for Broadmeadows, Chadstone, Epping, Moorabbin, North Essendon, Niddrie and Preston, after those for Ringwood, Camberwell and Frankston were released on Saturday.

Instead of green-lighting six-storey apartment blocks across “walkable catchments” – jargon for suburban neighbourhoods within a 10-minute walk of a train station – the government has reduced the maximum height to either three or four storeys in some areas, although six storeys will be allowed on blocks of more than 1000 square metres.

Large swaths of low-rise residential neighbourhoods and even commercial or industrial land that had been included in the initial plans have now been cut out. The locations of another 25 activity centres are yet to be released – although they were flagged to be made public by the end of 2024.

Planning Minister Sonya Kilkenny denied any pressure from local Labor MPs in politically sensitive areas for the Labor Party was the reason behind some of the scaling back of the 10 activity centres.

“The scaling is responding to community … We have never seen such significant community engagement,” Kilkenny said.

The state government continues to use threatening rhetoric towards councils, introducing a new enforceable mechanism in the forthcoming planning blueprint document “Plan for Victoria”, which will allow the state government to take over as the approving authority for developments if the councils don’t meet approval targets.

It is not clear whether councils will need to hit a mandatory minimum of approvals each year to be considered “on track” for the targets set for 26 years in the future, or what the rolling requirements would be to avoid state intervention.

The government said the changed approval targets “take pressure off Melbourne’s urban fringe areas by delivering 70 per cent of growth in established areas and 30 per cent of growth in the outer suburbs – instead of the other way around”.

But even accounting for the reduced targets, growth areas Melton, Wyndham, Casey and Hume still have the highest targets in real terms of any local government areas outside the City of Melbourne. Those four growth councils account for 375,000 of the 1.78 million new homes in the updated targets.

A state government spokeswoman said the government was not wavering on its statewide target of 2.24 million new homes by 2051, and that targets announced last year were only ambit draft targets and had excess built into them in the knowledge they would need to be scaled back.

Although the Greater Melbourne target has been scaled back, from 2 million to 1.78 million, the government has yet to release its updated housing targets for the rest of the state. The government stated regional Victoria would absorb 25 per cent of new homes by 2051; which would amount to 560,000 of the 2.24 million target.

The targets and plans revealed at the weekend are urban planning rules only to allow for commercial development; the state itself will not be building the homes. Councils have previously pointed out they may approve a development application, but whether and how fast the permit is acted on is a matter for developers.

Opposition planning spokesman Richard Riordan cast doubt on the revised targets being met, pointing out that the state has failed to achieve its target of building 80,000 new homes in the first year of the initiative.

“The government’s made much of its housing targets and housing strategies. They come out now almost like clockwork, every six months with another thought bubble,” he said.

“This government is all talk and no action. It hasn’t used government land. It hasn’t activated and worked with other philanthropic groups that own vast tracts of land, such as our church institutions and others, to fast-track opportunities. There are easy gets in this city.”

The Property Council, the lobby group for major developers, welcomed the planning changes but said construction would not happen at the scale required to meet the government’s targets without tax reform.

“Until we see some relief for the development industry with input costs, [meeting the targets] will remain a significant challenge,” Property Council chief executive Cath Evans said.

“We have the highest taxing state on property taxes, and this negatively impacts the ability of developers to bring new housing stock to the market.”

Pro-housing lobby group YIMBY (Yes in My Backyard) Melbourne admonished the government for scaling down its ambition in the activity centres, accusing the government of pandering to NIMBYism, while economic think tank Prosper Australia called for further taxation of the rezoned areas, where land values are expected to skyrocket, to reinvest windfall profits into community assets.

“While we welcome efforts to increase housing supply, upzoning without value capture represents a giveaway to land speculators at the expense of the broader community,” Rayna Fahey, spokesperson for Prosper Australia said on Sunday.

With Chip Le Grand, Adam Carey

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