Victoria’s Housing Targets: 2 Million More Homes by 2051

Overall, the housing targets reflect the long-held policy aspiration for 70% of new dwellings to be constructed in established suburbs, and the remaining 30% in Melbourne’s growth areas. But given our historic failure to meet this 70/30 split, simply reinforcing the same aspiration isn’t going to shift the dial.

Figure 1 – Number of dwellings targeted by sub-region (rounded)

Meeting these targets will require a step change in housing delivery.  In the last five years, only two of the 32 LGAs in Greater Melbourne have achieved an approval rate that would meet the target levels set. These were Wyndham and Casey in the growth areas.

While significant growth is targeted across established areas of Melbourne, when viewed on a per-Council basis, the seven Growth area Councils are tasked to deliver 60% more than their counterparts in the middle ring.  The four inner Melbourne Council areas will also need to deliver substantial growth.

We must also acknowledge that Planning policy alone does not deliver homes.  There are currently 3 times more approved apartments than there are apartments under construction in Melbourne. Hurdles to development do not stop at Planning.

Business as usual won’t get us where we need to be.

While we await further details, it’s clear that these targets serve as a valuable conversation starter, focusing our collective attention on the spatial solutions – what can be delivered and where. But it is important to note that they remain aspirational until there is buy-in and commitment at the local level. We hope that the spirit of the National Housing Accord will permeate all levels of government, from Federal to State and Local, in delivering action on the housing crisis.

The relationship between these targets and the ten-year goals previously outlined in the Housing Statement is not entirely clear, as both the target and timeframe have increased. This raises questions about how we ensure accountability and delivery. How do we prevent these targets from becoming another policy that gets superseded before tangible results are initiated by it?

The State Government has sought feedback from Councils on what planning changes would be required to achieve the proposed targets, but this relies on Councils supporting the proposed targets allocated to them first. Otherwise, what incentive is there to find a way to accommodate the proposed growth?

The importance of monitoring progress against the targets cannot be overstated. Regular reviews are essential to identify blockages and devise solutions. This is not a set-and-forget policy; it requires ongoing attention and adjustment.

By doubling the target and trebling the timeframe, we run the risk of losing sight of the urgent need to deliver more homes today and in the next five to ten years. The housing crisis is not a distant problem; it’s a pressing issue that demands immediate action. We simply cannot afford to postpone this until later.

For the housing targets to make a notable impact on the overall Housing Statement goals, we need to establish interim timeframes and accountability measures. The question is, how do we ensure this accountability? Will it be through incentives (the carrot) or penalties (the stick)?

The missing piece of this puzzle is a mechanism or process that ensures Councils genuinely pursue and deliver on these targets at a local level year-to-year. What rewards will they receive for meeting targets? Conversely, what consequences will they face for falling short?

We’ve seen it reported that Councils who fail to meet targets may be punished by loss of planning powers to the State, but given this already occurs through a number of planning pathways, is this enough to genuinely impact delivery? There is rarely a better motivator than money – should progress against targets be tied to funding or infrastructure?

Given the concerns which have already been raised by some Councils, robust accountability measures – and likely a combination of both incentives and penalties – will be necessary to spur action. 

Critically, planning is just one piece of the puzzle to address the housing crisis. The property industry knows all too well that approving homes does not necessarily translate to homes being built, especially given the viability gap in current economic conditions. The journey from approval to construction is fraught with challenges that need to be addressed in tandem.

Concerted efforts across all layers of government are needed to chip away at friction in the housing sector:

• Capacity can only be met by considered staging of infrastructure spend linked to housing outcomes.
• Taxes and charges need to be reviewed to erode barriers to investment, development, and purchasing.
• Targeted migration and skills capacity building, combined with improved innovation to drive construction efficiency.
• Triangulation of federal and state funding with planning levers to offset the costs of delivering affordable housing.
• State & Local Government, planning authorities and referral agencies need to be adequately resourced to deal with planning processes more efficiently.
• To address material shortages, Federal & State Governments need to act in partnership with industry to improve the demand-supply balance, and the long-term sustainability of the construction sector

This is not a task for one level of government or one department; it requires a holistic, cross-government approach.

Fundamentally, while planning is an essential part of addressing the housing crisis, it’s not the only part. We need a comprehensive, multi-faceted approach that tackles the issue from all angles. Only then can we hope to translate housing approvals into actual homes on the ground.