Is Melbourne 2030 achieving its objectives on housing?

Percentage of new dwelling construction within 1km of a principal or major activity centre

A new research paper suggests that many of Melbourne 2030’s key ambitions in relation to housing have come to nought.

The paper, Planning and the characteristics of housing supply in Melbourne, was written by Dr Robin Goodman and a team of fellow academics from the RMIT Research Centre and published by the Australian Housing and Urban Research Institute (AHURI).

The first part of the project analysed a number of data bases on land transactions over the period from 1990 to 2007.

Contrary to the aspiration of Melbourne 2030, the researchers found that the proportion of new housing located within one kilometre of an activity centre did not increase following the promulgation of the Strategy.

In fact activity centres are not generally a favoured location for new housing. Of the 115 studied, just four account for almost a third of all housing built within one kilometre. Those four are all very close to the city centre – South Melbourne, Melbourne (CBD), Port Melbourne (Bay St) and Carlton (Lygon St). The ten with the highest proportion of new housing were either close to the CBD or in new parts of Growth Areas where developable land was still available close to activity centres.

When the radius is extended to two kilometres, the researchers found that the proportion of new housing actually declined since Melbourne 2030 was released.

They found a similar pattern with rail stations – the proportion of dwellings built within a one kilometre radius of a train station declined after Melbourne 2030 came into effect.

In addition, the delay between acquisition of property by a developer and completion of construction is more protracted on parcels that are closer to activity centres.

The second part of the project involved interviews with a small number of developers and town planners about housing activity on the fringe.

What emerged from the interviews is the view that the type and mix of housing is determined by developers rather than by planning policy as expressed, for example, through documents like Melbourne 2030. Developers build what they assess the market wants and they can sell, rather than what policy seems to imply.

Medium density housing has only a small share of the fringe market because it’s not competitive. As one developer said:

There’s no point, for example, going to the outer corridor in a greenfield area and saying, gee, I’m going to build a four-storey apartment block and sell someone a single-bedroom apartment there, and it’ll cost them just as much as they can go and buy a block of land and put a four-bedroom home on it and still have a nice big backyard. It does not work. No one will buy that, because they won’t see the value proposition.

New dwelling construction within 1km of a principal or major activity centre ‘after’ Melbourne 2030

Many of those interviewed, both developers and planners, felt that planning strategies have little influence – they’re vague and aspirational and have little impact on developers.

One area where at first glance Melbourne 2030 seems to have had an impact is residential density, which has increased on the fringe (and in the city centre). The interviewees however felt this was the result of declining affordability, not policy.

The influence of policy appears to be confined to the high level structure planning process which designates those broad areas that can be used for various activities, e.g. housing, shopping or employment. However within established areas (i.e. outside the Growth Areas) the location of residential development is determined primarily by the price and availability of land.

The report notes that the use of private covenants is now becoming widespread. The most common types of covenants are those mandating a minimum floor area and those that prevent any future subdivision.

Many of the issues raised in the report underline the fact that Melbourne 2030 is largely rhetorical. It is not supported by ‘on the ground’ policies that might give real effect to that rhetoric. It is in short largely spin. That’s not surprising, because the sorts of real actions needed (say) to increase housing supply in and around activity centres are politically fraught.

To my mind, the report also shows how difficult it is to implement policies that don’t ‘go with the grain’. Redevelopment should be encouraged in activity centres but other than in the city centre they will only make a small contribution to supply. What’s needed is a focus on areas with land of a size and price that is attractive to developers and can be retro-fitted with improved public transport (inevitably buses!).

An important caveat for me is the methodology employed in the study – it only counted development on vacant land. The authors say they undercount new dwellings by about 7% and emphasise that their findings should be taken as indicative. They’re obviously confident enough to publish the research but I agree that it should only be taken as indicative.

Still, there’s much more in this report than I’ve recorded here. I’ll endeavour to post some of the key quotes from the interviews later this week, but if you’ve got time and are interested enough, it’s well worth a read, albeit it’s 78 pages (AHURI really don’t seem to know how to do executive summaries well).

Update: The Age’s property editor, Simon Johanson, wrote a piece on the RMIT report on 13 December 2010.

8 Comments on “Is Melbourne 2030 achieving its objectives on housing?”

  1. Ian Woodcock says:

    Please could you say a bit more about your comment ‘the sorts of real actions needed (say) to increase housing supply in and around activity centres are politically fraught.’

  2. Mahyar says:

    And those four areas in any country without our system of defining suburbs would be considered the CBD, the centre or downtown, so they don’t really count. I’m surprised Docklands isn’t there.

    And that’s our fundamental problem. Politicians want to increase density, but people (Australians anyway) don’t, so we have this constant conflict no matter whether it’s tweedledee or tweedledum in power. Planning policy documents get written time and again and don’t have any impact.

    And yes, I don’t have the time to read a long report of an evening.

    • Ian Woodcock says:

      Which Australians don’t want density increases? Where does this information come from? (I’m genuinely interested in the answer, btw)

      • Mahyar says:

        Sorry, it wasn’t a scientific comment; just a hunch, based on the signs one sees in inner areas subject to greater density, like Ascot Vale and Yarraville.

        “Inappropriate development” this and that. Gimme a break.

      • Mahyar says:

        Having said that, it would be interesting to see a more informed opinion in the form of a Melbourne Urbanist article on the divide between what the public wants and what pollies/developers want.

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