Melbourne is experiencing significant changes in its housing landscape, with a series of reforms aimed at increasing affordable housing options for millennials. Over the past two years, the Victorian government has implemented a range of initiatives that have surprised even advocates like Brendan Coates, director of the Grattan Institute’s housing and economic security program. “We’ve seen, in many respects, a planning policy revolution in Victoria,” he stated, highlighting the unexpected extent of government action.
For decades, the housing discourse in Victoria was heavily influenced by “nimbys” (not in my back yard), a term used to describe residents resistant to new developments in their communities. However, a shift has occurred, fueled by a Labor government eager to attract younger voters and the emergence of the “yimby” (yes in my back yard) movement. This group, Yimby Melbourne, was founded in February 2023 after extensive online discussions among individuals frustrated by the lack of affordable housing options. O’Brien, the group’s lead organizer, remarked that they had initially aimed for grassroots efforts focused on specific developments, but the government’s responsiveness has allowed for more substantial changes in a shorter time frame.
The group’s first significant action came in April 2024 with a report proposing enforceable housing targets for local government areas (LGAs) and advocating for the rezoning of amenity-rich suburbs to accommodate thousands of new homes. By June 2024, the government announced its own LGA targets, continuing the momentum. Subsequently, in September 2024, Premier Jacinta Allan and Planning Minister Sonya Kilkenny revealed plans to rezone land around 50 train and tram stations, a move that sparked protests among some local residents.
The government’s reforms extend beyond zoning adjustments. They have introduced a fast-tracked townhouse code, simplified the process for homeowners to subdivide properties, eliminated parking requirements for new builds, and revamped the state’s infrastructure contribution scheme to ensure that developers fund necessary amenities. Most notably, the Victorian Parliament approved the most comprehensive overhaul of the Planning Act in decades, reducing approval times to as little as 10 days and limiting appeal rights primarily to adjacent property owners.
According to Coates, the changes in Victoria are significantly more ambitious than those seen in New South Wales during the same period. A recent report by the Grattan Institute highlighted that the modifications to the townhouse code and the introduction of 60 activity zones could increase the zoned housing capacity in Melbourne by approximately 1 million homes, representing 70% of the city’s existing housing stock. In comparison, New South Wales’ reforms could lead to 930,000 new homes in Sydney, or 40% of its current housing supply.
The townhouse code facilitates a fast-tracked planning process for duplexes, townhouses, and low-rise apartments up to three stories, subject to specific requirements. Coates suggested that if Sydney were to adopt a similar code, it could generate capacity for over 1 million new homes.
Despite these ambitious plans, not all stakeholders are convinced of their efficacy. High-profile protests have erupted in affluent suburbs like Brighton, where new regulations permit the construction of apartments up to 12 stories. In nearby Elsternwick, a rally against proposed housing towers was interrupted by yimby supporters, advocating for increased housing access.
Kat Smith, a senior policy officer at the Planning Institute Australia, praised the government’s willingness to explore new strategies. However, she criticized the limited engagement with planning professionals who will implement these changes. “From a planning perspective, [the changes] do not form a coherent or integrated reform agenda,” Smith stated. She expressed concern that the blanket rezoning around transport hubs does not adequately consider local contexts and ignores essential environmental and infrastructural factors.
The rising construction costs present another challenge. Coates indicated that Melbourne’s increased housing stock has led to lower prices compared to other major cities, complicating the financial viability of new projects. This situation is exacerbated by escalating construction costs, partly due to government competition for materials and labor through extensive infrastructure projects. “If the Victorian government had enacted these reforms in its last term, much of the additional capacity would have been profitable to build,” he explained.
Recent data from the Procore/Property Council industry sentiment survey revealed that confidence in Victoria’s property sector is now the lowest in the nation, 24 points below the national average. Two-thirds of respondents attributed this decline to the state’s tax policies, particularly the foreign purchaser additional duty, which imposes an extra 8% stamp duty on international buyers. This tax could hinder Melbourne’s attractiveness to foreign investors, who play a crucial role in stimulating new developments.
The Victorian government has defended its position, asserting that first-time home buyers should not have to compete directly with wealthy foreign investors. Coates and O’Brien have called for urgent reforms to heritage protection, noting that 29% of residential land within 10 kilometers of the central business district is subject to a heritage overlay. O’Brien commented, “Enormous amounts of Melbourne are locked up under heritage—typically affecting old, mouldy homes that are share houses. These are low-quality dwellings that could be much better used.”
As Melbourne navigates this transformative period in housing policy, the balance between development and community concerns remains a critical issue. The ongoing dialogue among stakeholders will be essential in shaping a more accessible housing market that meets the diverse needs of its residents.
