Are we squandering infill housing opportunities?

Eight unit Infill project, Alphington

I’ve argued before (here, here and here) that new housing supply within Melbourne’s established suburbs is excessively dependent on small-scale infill housing projects. In the expansive middle ring suburbs, around half of all housing projects provide only one or two additional dwellings, with the great majority providing only one.

It’s therefore important to look at other options, but given it’s carrying most of the burden, it’s also worth asking if infill is being managed as efficiently as it could be.

The exhibit above shows a newly completed infill development at 2-4 Old Heidelberg Rd in suburban Alphington (here are some interior pictures). It provides eight dwellings on an 825 sq m site that originally would’ve been intended to accommodate a single detached house like its neighbour.

That’s a big up-lift in density – if most infill projects yielded this many new dwellings we wouldn’t have a supply problem. But the great bulk are simple dual occupancy developments. This raises the important issue of whether we’re maximising the value we’re getting from the limited supply of precious infill sites.

If projects that could yield four, six or eight new units are only providing one, then that could represent a very high opportunity cost. Given that activity centres in the middle ring suburbs are mostly failing to deliver much new housing, what we ideally want to see is each lot delivering to its full potential – yielding the maximum number of new dwellings that, having regard to its particular circumstances, it reasonably could.

There are of course many “objective” reasons why not all projects can yield as many dwellings as 2-4 Old Heidelberg Rd. Some redevelopment sites are small or inconveniently shaped. Some may have infrastructure inadequacies or access might be hard.

There are also a range of legitimate planning constraints like heritage, over-looking and solar access that might limit the number of units that can be built on a given lot. And the nature of the market in a particular area could mean the highest return comes from building fewer dwellings rather than maximising the total number.

But there are reasons to suspect that “objective” factors do not always, or even usually, explain why a lot isn’t developed to its potential. Consider these two contiguous lots in Elphin St Ivanhoe – although they’re the same size and have a common context, one has six dwellings and the other has two.

The most commonly cited explanation for these sorts of anomalies is the “dead hand” of the planning system. Additional cost and risk is imposed on projects by self-interested opposition from existing residents. Councils often lack the resources and skills to deal with the complexity of sophisticated opposition and, not surprisingly, often take a position more sympathetic to their constituents than to the developer.

There’s a range of measures that have been suggested to tilt the balance more toward redevelopment. These include abolition of third party appeals (the issue got a run in The Age recently), code-based approval systems, more resources for councils, better forward planning, and so on. I endorse this position but there’s no doubt it’s very hard politically, both for councils and the state government.

I think there’s another approach that’s worth thinking about, particularly for the middle ring suburbs. We know infill developers tend to be small and it could be that many simply lack the knowledge, skills, access to finance and appetite for risk to enable them to undertake larger projects. They might not have the wherewithal to push for larger projects in the face of vigorous opposition from neighbours and limited support from timid councils.

Perhaps the project class with the greatest potential for “under-utilisation” is dual occupancy. Landowners carve off a bit of land and sell it, usually for the construction of one additional dwelling. That way they get to stay in their old house and transform some excess land into cash without taking much risk.

That’s a net addition to supply so it’s positive. While in many cases the value of the existing dwelling will preclude more intense development, dual occupancy is a lost opportunity if the entire site could’ve been successfully redeveloped for four, six or eight dwellings.

Many of these landowners would say they want to stay in their existing house. However, having accepted the substantial changes to their living circumstance inherent in the decision to subdivide, it might be that a significant number would be prepared to go further if they had the confidence to tackle a bigger project.

The necessary confidence could come from the government. This could take a number of forms, for example

  • An advisory service to landowners and small developers on the development possibilities of sites and the sorts of steps required to realise their full potential
  • A brokerage service to connect landowners and small-scale developers with investors and technical service providers, possibly with the government acting as an “advocate” or “independent advisor” to the landowner/developer. This would include the trasitional option of simply selling the whole property to a developer.
  • A development agency which undertakes the project in association with the landowner. There is a spectrum of risk-sharing and financing options that could be considered. Ultimately the primary pay-off for the government shouldn’t be revenue but the social benefit of increased housing supply

These sorts of initiatives would ideally be paralleled by reforms to make the planning rules less restrictive and approvals faster.

Substantial government involvement would have to be justified by the social benefits it delivered. The key downside with any of these options is the possibility that landowners could lose money. After all, rather than simply selling a portion of their land for dual occupancy, in some cases they would in effect be developers. They might find it too easy to blame the government if things didn’t work out well.

Unfortunately I don’t have any historical data on the proportion of small-scale suburban projects that would’ve otherwise lent themselves to more intense development. But I think the possibility deserves investigation by the state government. At the very least, we should try to establish how many of those small-scale infill projects are (or aren’t) squandering a valuable resource.


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29 Comments on “Are we squandering infill housing opportunities?”

  1. Chris G says:

    Can you imagine how horrible Melbourne would be if we gave free reign to developers in stead of giving “self interested” residents input to the process. Its not as if VCAT doesn’t already exist to nullify local democracy. There are vacant lots all over the city. Maybe the self interested developers are land banking, or making their own self interested decisions.

    Stop criticizing people who have no power except to object. 90% of the time, objections are ignored. When they are obeyed the outcome is often improved. The objectors live their and understand their place better than the 19 year old planner who is taught the development mind-set by you lot. The planning profession has let us all down and that’s why residents are objecting – They don’t buy the big city vision statement.

    How about a government sponsored planner to advise objectors – because the council doesn’t.

    • John Burke says:

      So Chris G thats it. Self interested residents should be “obeyed” is the conclusion. I presume by “development mind-set” you include people who have as their goal a more social society and that you prefer the march of suburban sprawl specific to your ideal. Remarkably that advance was actually brought about by civic planners to accomodate the needs of the car and in no fashion had human happiness as a goal.

      Anyone objecting to density projects is clearly worth a bob or 2 anyway, and unlikely to be disenfranchised on mass from their bungalow heavens through the mechanism of democracy. Individual cases should be examined on merit or not, but as a general principal we can’t go on forever expanding suburbs anymore than Amway will work when everyone is in it.

    • Alan Davies says:

      I know of no planners who advocate “free reign” for developers. The issue is finding an accommodation between the needs of growth (more people want to live in established suburbs) and the needs of existing residents (who understandably are worried that any redevelopment will make them worse off).

      • Chris G says:

        “A CONTROVERSIAL plan to strip councils of powers to oversee small residential developments in special zones will be looked at by the State Government as a way to deal with the housing shortage.”

        April 29, 2011

        So much for finding an accommodation.

        • That is an idea, put forth by the MBAV. It is not legislation, nor has it been approved by the government.

          What do you suggest is done to increase the number of dwellings to accommodate population growth?

          • Chris G says:

            I don’t think we should be encouraging population growth. I don’t want Melbourne to be like Tokyo. We have already outstripped our water supply, and are breathing polluted air and concreting over all our soil. What problem does increased population fix? Victoria advertises to attract more people – We need more builders. Its good for the economy in the short term. We need to think of ways to prosper without growing and without polluting. Growth is lazy economics from a bygone era. There are 7 billion people who would all like to be better off. What problem are we solving by moving them to the city with the highest per-capita emissions in the world? We are not proposing to build that many apartments, only to meet the insatiable market. And only if it is cashed up. Affordable housing does not seem to interest the developers. I don’t see any forward planning in our population policy, just arguments about heights and set-backs and densities?

          • Alan Davies says:

            Chris, you might not be satisfied with it, but Tony Burke did publish his population strategy back in May.

          • Comparing Melbourne with Tokyo is absurd. I don’t want Melbourne to be like Tokyo either, thankfully its not going to happen no matter what policies are in place.

            However, as for not encouraging population growth what do you suggest? The vast majority of cities all over the world are experiencing population growth. Reversing that trend in Australia would be very difficult. Additionally we have a rapidly ageing population that is going to require support over the next few decades. The only real way to be able to pay for that is to ensure that enough workers are paying taxes.

            As for our water supply, there are plenty of solutions there, many of them happening now: 3rd pipes for recycled water, perfect for not potable uses; small localised water treatment systems, again for non potable uses; better storm water catchment and treatment; etc.

            As for concreting more of our soil, that is exactly why we need to increase densities rather than continue sprawl, the same goes for polluting air (higher densities = more PT, walking, biking friendly).

    • If someone wants to give free reign to developers, they’re not planners. They’re developers. There is a big difference.

      • John Burke says:

        If someone wants to give free reign to “self interested” residents they are not planners either, but in an entirely different sense. The white picket fence and car is so 50’s. In short my favourite “ism” is nimbyism, ever since Marx described Engels’ wife as “common”.

      • Chris G says:

        Most planners work for developers, it goes with the career. No development, no planners needed. Some spend a bit of time in the council planning department, but why would you spurn a potential employer? There is a structural bias towards the “development mind set”. They speak the same language, and residents speak in values that do not translate into ‘ResCode’ or what ever its called this year…

        • Terry says:

          True to an extent, but planners look at the big picture, not just the particular concerns of particular residents in a particular street. It would be impossible to address each individual concern and mould a development to address every competing interest. Instead we strive to be responsive to the inherent qualities of each site, so admittedly we are inconsistent in our approach in that sense, but rightly so – IE sites with a main road frontage, or near public transport and shops and/or located adjacent a school or park are afforded a different set of parameters to sites within the residential hinterland.

          More people are flocking to Melbourne which requires a response from a housing perspective. Such an approach requires the consideration of range of different competing requirements – neighbourhood character, parking, need for further housing. But what might be considered overdevelopment now will be fairly normal when Melbourne is vastly more populated in the future.

          Admittedly the design and appearance of some of the new developments out there are very poor and often ugly which is a personal concern of mine. The state gov needs to give us more tools and powers to address this issue. Perhaps each Council needs a panel of architects which sit once a month to decide on the merits of various proposals as I have experience in the UK. After all the majority of planners don’t have an architectural degree.

          • T says:

            I agree with you about the UGLY! (case in point above) It would be great if some focus were given to preserving the aesthetic appeal of a neighbourhood and requiring all new development to be complementary to the areas original style. I get that there is a need to create more dense development, but maybe they would be better received if they weren’t so freaking hideous all the time!

  2. NickS says:

    Once you start adding housing of this nature you hit problems like lack of car parking, infrastructure, shops, public transport etc. Banging 16-20 people in a space that used to house maybe 2-4, means you need more of everything to support them.

    Plus, who wants to live next door to a big block of flats that look into your backyard and screws your privacy? This is NOT the solution.

    • In some cases this is true, in the case above the units are equipped with dual car garages (see the link Alan provided above). You can also see from the photo in the article that this is not “a big block of flats that look into your backyard and screws your privacy”. They’re two story units, no higher than the average two story detached house. Medium density housing does not automatically equate to giant blocks of flats everywhere, something that many people do not seem to comprehend very well.

      However as you’ve said, and I’ve agreed there are cases where infrastructure would need to be improved. In these instances developments are best suited to activity centres. Increases in population in and surrounding activity centres means there is more potential for a wider range of shops, better public transport, etc which benefits everyone in the area. However as Alan has pointed out our planning system has struggled to get more of these developments in activity centres. Personally I believe the planning system isn’t strong enough to truly encourage development in activity centres and this needs to be dealt with.

    • Alan Davies says:

      Small-scale infill (up to ten units) isn’t THE solution, but it’s got to be part of it.
      Activity Centres generally aren’t delivering and the potential of brownfields is exaggerated.

      Infill is carrying much of the burden of supply but it’s not enough. I’ve suggested another potential source of supply through retro-fitting, but its got issues too.

      On the other hand, the fringe is delivering. However, while I think the downsides of the fringe are exaggerated, there are a lot of people who don’t want to live there.

      I think we need a range of sources to contribute to supply because the political problems around any single source are very hard, esp within the established suburbs.

      My concern in the above post is we don’t seem to appreciate infill sites are a precious asset and that we need to maximise the value we get as a community from each one. The yield of each infill lot should be determined by objective criteria not by who can shout the loudest.

      • Chris G says:

        Councils should keep statistics on the number of dwelling that are approved (whether by them or VCAT) but not started two or more years later. I know of thousands of dwellings in the inner city which have been approved, some more than 10 years ago.

        There is a former historic brewery in Collingwood which had a proposal for 47 apartments in 1998.
        In 2001 a proposal for 119 dwellings on 9 stories was approved.
        In 2003, 153 dwellings over 12 stories, knocked back to 11 stories by VCAT.
        In 2011 a new proposal for 359 apartments up to 17 stories has been lodged for the same site.

        Each new proposal is from a new owner.
        The owners of the permits are banking the increased value when they sell the land.

        This is not an isolated case.

        Perhaps council should collect rates based on the improved value of the site (with the permit).

        Perhaps the real brown field capacity is being manipulated by land banking. It is unlikely there is no market for inner city apartments in brown field sites, leading to financing problems for the developers.

  3. Oz says:

    More discussion on the issue of social benefits to the wider community is warranted. An enlightened government which we do not have may place more emphasis on net community benefit rather than pure self interest of existing land owners when considering dwelling density increases.

  4. rohan says:

    When you say ‘we’ dont value infill sites enough, do you mean ‘we’ as a community should ensure that all / more such sites should have more units on them ? Developers do value them, and there is plenty of infill going on with 4 -6 units replacing a house when the block is big enough – I dont know if small builder / developers are put off by local Council’s / residents objecting, slowing the process down, making them go to VCAT, but in some areas (the richer ones with larger blocks) that’s prob the case. So then they build a smaller rather than larger number. It might however also be the case that a developer builds what sells and makes the most return for input, and in many cases maybe replacing one with two is the most profitable – someone needs to ask the small builder / developers to find out. Certainly larger developers who are building the larger blocks in more inner locations know that they will win at VCAT, and are prepared to pay the extra cost. Hate to suggest this, but given the as-of-right building envelope of rescode, and the as-of-right to build a single house within that envelope (no panning permit required), maybe that could simply be expanded to as-of-right for two (or is that already the case?) and perhaps to six, on a formula based on the area of the block. The current envelope doesnt guarantee no overshadowing or overlooking, so I think it should be changed to do so, and then as Melb 2030 intended, anything near PT / activity centre, within the (new) envelope, with the number of units based on the site area, its as-of-right. Better than reducing access to appeals in an unspecified way.

  5. Jol says:

    An effectrive tool to address this area of concern is a mandatory approach to density. The London Plan prescribes a minimum number of habitable rooms per hectre. It provides a sliding scale based on proximty to shops, services and public transport. In my opinion it did not impact on neighbourhod character, but was an effective tool to ensure development is provided at a high density where it was most needed and most effective, therefore redcuing pressure on other less densely built up areas.

    Refer to page 85.

    Click to access The%20London%20Plan%202011.pdf

  6. John Burke says:

    “We in the sense of a wider community” as a principle is the concept that I appreciate in Mr Davies blog generally despite potentials for disagreement with him in practice. I would add further that those thinking “me” instead of “we” often as not are just sticking a ferret down their trowsers in a general sense.

  7. John Burke says:

    At the end of the day, and let me declare myself, it seems to be all about cars (as usual) for or against. Why not just directly ask “what is good for cars”? and stop messing about with other irrelevant topics. That is the most important consideration if we are to be ruled by the tyranny of the majority. Condemn the less well off to the outer suburbs, we can ofset that by donations to deserving recipients of charity, more conveniently located in poorer countries far from opportunities to disturb our middle class existance..

    As for our own underclass, forever to the outer suburbs and good riddence!

  8. Daniel says:

    Many people (myself included) would much rather live in the above development close to services, than out in the outer suburbs. One issue I do note (and it’s particularly prevalent in Mount Waverley where I grew up) is that all to often the replacement units are finished to such a high standard, and large size with high quality/standard features that the new development ends up being priced dearer than the original house. Infill housing is all to often not providing a more affordable alternative.

    I’m also surprised that car parking wasn’t constructed underground in the Alphington project. 10 years ago I lived in Sydney, in a beach side southern suburb. Many of the newer developments had an underground parking area, with what would have been the driveway being a path, and open green space (still wide enough for vehicle access), but garages not taking up space at ground level.

  9. David Mulhall says:

    My answer to the basic premise of Alan’s excellent blog “Are we squandering infill housing opportunities?” is a definite yes.

    The disconnect between State and Local Government is the chronic issue. As a result low yeilds and the apparent reluctance of developers to contemplate proposals other than the typical ‘dual occupancy’ design are the common outcomes.

    Leaving local government to implement a State Government’s planning policy has always appeared flawed to me and until this issue is resolved the band-aid fixes will continue.

    Meanwhile, as the endless arguements about population growth, aesthetics, developers greed and the ridiculous notion town planners advocate ‘free reign” to developers rage on, urban sprawl continues,

    The move toward code based assessment is a step in the right direction. For everyone concerned, benchmarking as-of-right design protocols brings certainty and takes some of the “angst” out of the process of assessing development applications.

    Code assessment would ensure finite resources could be better applied to the real work of town planners, rather than say, whether a boundary wall should be 2.7m high rather than 3.0m.

    Reform of the planning process is critical to ensure appropriate and innovative development is allowed to flourish. As Alan’s blog suggests, the current system often stifles appropriate development. Matthew Guy knows this.

    The Underwood Advisory Committee review into the operation of the VPP’s and Planning Schemes could well be a turning point.

  10. Here’s something new relevant to the debate:

    Think this will have an affect on the number of applications?

  11. Jim Wright says:

    I have been looking at various options for increasing the population density in cities (as opposed to increasing the urban sprawl) as part of an inquiry into what is the real population carrying capacity of Australia. One of the ideas I came up with was based on the German Huf Haus concept (you can Google it). The Huf Haus is a steel-framed prefabricated building which featured in a BBC program on interesting designs. My take on the matter was that we could use the concept to build adaptable houses. For instance, a quite large house required by a family could be modified later by the empty-nesters to create two or more housing units, simply by moving some walls around. Multiple service connections would be installed when the building was first constructed, but could be simply closed off until required. See “Urban Landscape for a new era” in my blog

    • John Burke says:

      I could be accused of being a one trick pony Jim, but to reiterate my constant theme, all planning in Australia is about “how do we fit cars in” and every good idea such as yours has to pass the “is it good for cars” test. I think yours does for the record.

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