12.10.2023Why Melbourne needs more medium-density housing

Melbourne is one of the fastest growing cities in the developed world. Its population recently surpassed 5 million and is on track to surpass 6 million by 2031 and 9 million by mid-century. As the city continues to evolve into a vibrant metropolis, it faces the pressing challenge of accommodating its growing population while maintaining its character and liveability. To strike a balance between preserving these traits and urban growth, increasing medium-density housing, including along key transit corridors, is needed. Supporting greater housing supply in existing suburbs brings benefits to both residents and the city.

Melbourne’s is a low-density city, with residential development characterised by spacious land plots comprising a relatively low number of housing units. The Committee’s Benchmarking Melbourne 2023 report ranks Melbourne 16 of 19 peer cities for population density as a metropolis. Melbourne’s growth model has seen an expansion of the suburbs and new homes developed in greenfield areas. Whilst ‘Plan Melbourne,’ the city’s key planning document, outlines an aspiration for 70% of new homes to be built in existing suburbs, thus far, this target has not been achieved.

Urban expansion without a corresponding ability to keep up with appropriate supporting infrastructure investment, is has the potential to exacerbate social and economic inequalities. Benchmarking Melbourne highlights a ‘tale of two cities,’ with residents living in the outer suburbs facing higher private transport costs and unequal access to amenities, education and health services, work and job opportunities, as well as social experiences. Combined with population growth putting pressure on housing supply, there is an urgency for an approach that supports new home development in existing suburbs, close to amenities.

The Victorian Government has made significant investments in housing, recognising the need for a supply of affordable homes and a housing mix. The government’s $5.3 billion investment in social and affordable housing as part of the ‘Big Housing Build’ aims to deliver over 12,000 new homes in Victoria within four years. These measures have been complimented by the government’s recent package of reforms, outlined in its Housing Statement, which will see reforms to help deliver 80,000 homes annually across Victoria including in existing suburbs.

A further focus on reforms that will enhance supply of medium-density housing in existing suburbs is essential. Urban expansion not only consumes valuable open spaces but also leads to increased infrastructure costs and longer commuting times. According to Infrastructure Victoria, building new infrastructure in greenfield suburbs can be up to four times more expensive than adapting existing infrastructure in established suburbs.

Melbourne’s housing market faces the dual challenges of affordability and diversity. The city is now the fifth most unaffordable housing market in the English-speaking world, while the Melbourne Rent Index increased by 15.7% in the 12 months to June 2023 (Department of Families, Fairness and Housing). Expanding medium-density housing options presents a viable solution. By introducing a mix of housing types, including townhouses and low-rise apartments, Melbourne can cater to a broader range of budgets and lifestyles. Increased housing diversity not only makes the city more accessible to a diverse population but also ensures that residents can find homes that suit their needs and preferences. Infrastructure Victoria’s Our Home Choices report looks at how existing demand for housing in new greenfield suburbs can be shifted to established suburbs, closer to existing infrastructure such as schools, hospitals and public transport. It highlights that one in 5 households said they would trade a detached home in a new suburb for a townhouse or apartment for the same price closer to city centres.  Furthermore, the densification of these areas can help drive down housing costs, making homeownership more attainable for many.

Medium-density housing offers a unique opportunity to foster social interaction and strengthen community bonds. With the frequency of social contact declining across all age groups in Australia for decades – with a relative decline of 11% between 2001 and 2020 (HILDA Survey) – embracing medium density living could arrest the decline and encourage a sense of place and belonging. Residents are more likely to engage in spontaneous interactions, leading to the creation of vibrant, diverse neighbourhoods. Shared spaces and amenities within these developments promote social cohesion, offering opportunities for residents to connect, share resources, and participate in community activities.

Authorities may also need to have a specific focus on medium-density housing developments along transit corridors. Whilst the Housing Statement recognises priority activity centres and there is also a focus on precinct development across Melbourne such as the SRL precincts, an additional focus on transit corridors offers a significant opportunity. Concentrating housing along transit corridors would promote a more compact urban environment, reduce car dependency and help Melbourne grow sustainably.

Increasing medium-density housing along transit corridors could directly address Melbourne’s transport challenges, which impose a range of costs on people, including time loss, elevated fuel consumption and detrimental health and environmental effects. It also diminishes Melbourne’s productivity, costing the city $4.6 billion annually, which is expected to increase to $10 billion by 2030 (City of Melbourne). By offering convenient access to buses, trams, and trains, residents would rely less on private vehicles. This shift would promote a more sustainable and efficient transport system, reducing traffic congestion and its associated negative impacts on air quality and travel times, as well as help ensure equitable access to public transport for all Melburnians.

Medium-density housing developments along transit corridors can revitalise local economies and contribute to the creation of vibrant retail spaces. Increased population density provides a larger customer base for local businesses, supporting their growth and sustainability. Shops, cafes, and services can thrive when they are easily accessible to a denser population, with household transport costs in walkable neighbourhoods half of those in car-dependent areas – increasing disposable income – while high walking rates can increase incidental trading in main streets by up to 40% (DELWP). Additionally, mixed-use developments that combine housing with ground-level retail spaces foster lively streetscapes, attracting both residents and visitors alike. These vibrant retail spaces contribute to the overall liveability and attractiveness of the city.

Melbourne stands at a critical juncture, where careful planning can shape its future trajectory. By increasing medium-density housing, with a specific focus along key transit corridors throughout the city, Melbourne can achieve a sustainable balance between growth and liveability. Efficient land use, improved connectivity, enhanced social interaction, housing diversity, and economic vitality are just some of the benefits that this approach brings. As the city evolves, embracing medium-density housing will enable Melbourne to build a more inclusive, connected, and vibrant urban environment for current and future generations to enjoy.

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