Unfortunately, our current housing crisis does not surprise me. It has been clear that housing unaffordability has been growing out of control and beyond the means of ordinary Australians for decades. The alarm bells have been ringing but, until recently, as the voices of millennials and Gen X’s have started to get some political traction, there has been little serious effort to change how we increase the supply of housing in Victoria.
For the past decade, Victoria has been building around 32,000 dwellings a year. However, between immigration and the continuing decline in household sizes, we actually need 55,000 new dwellings each year. That means nearly a quarter of a million houses are missing in the supply chain. No wonder it now takes a typical Australian close to 10 years to save up for a deposit for their first home.
The consistent undersupply of housing is part of the reason that it is now effectively twice as unaffordable to buy a home in 2023 as it was nearly 50 years ago. Back in 1976, it took 5.5 times the average wage to buy an average house. In 2023, this ratio has risen to 10 times the average wage.
Quite simply, both the Federal and State Government has been caught napping on the issues of the supply of housing and infrastructure provision since reforms to the immigration policy in the early 1990s.
So, what’s required to solve one of the biggest challenges of our generation?
In recent times, the focus has been on increasing the supply of housing by removing some of the barriers to obtaining planning approvals. The Victorian Government has boldly announced a target of 80,000 dwellings a year, nearly 50,000 more than we are currently building. It is an ambitious goal but one that we need to meet if we are to enable future generations security in housing.
The Current System
To achieve this 80,000 dwelling-a-year objective, we need to radically transform the supply of housing in Victoria. Piecemeal approaches and tinkering around the edges will not come close to the 2.5 times increase in housing required, and the fact that we need to start building them now!
Recent government initiatives focus on increased state government facilitation for major projects, $50 million in Melbourne and $15 million in regional and rural areas provided that 10% of the number of dwellings are classified as affordable. Other changes include small ‘granny flats’ in backyards and allowing single dwellings on lots less than 500 square metres without the need for planning approvals.
These changes are a step in the right direction but we need a more comprehensive and radical change to the housing approval process. After all, how many $50 million projects are in there in the pipeline and how many granny flats will realistically be built to supply 800,000 dwellings in a decade?
These types of reforms are part of the solution but, realistically, will not come close to increasing housing supply to the volumes required. It’s going to take some dangerous thinking and radical reform of our planning system to get there.
That why I’ve been such a big fan of the YIMBY Melbourne movement and the work undertaken by Jonathan Spear and his colleagues in reimagining what housing reform could look like. These ideas are left of centre, challenge the status quo and imagine a Melbourne where access to public transport is the centre point to housing location, above and beyond traditional notions of neighbourhood character.
If we are to increase housing supply by a multiplier of 2.5, we need to imagine our beloved Melbourne where residential land with good proximity to public transport more actively facilitates the development of medium density housing. I’m tired of seeing land located on tramlines and bus routes being restricted to one and two storey development in wealthy inner urban neighbourhoods.
If we are to increase our house by 80,000 dwellings a year, we need to change the way we think of our suburbs and align local planning policy and controls with federal policy. Removing the Neighbourhood Residential Zone altogether would be a start as well as removing the objective in the General Residential Zone requiring development to be respectful of neighbourhood character would be another.
We cannot build 800,000 dwellings in the next decade if our local policy is at odds with the federal push for immigration. Given local policy must be subservient to state policy, perhaps its time for this to reflect federal policy as well. Whether it be changes to the objectives of our residential zones and/or modification to the net community benefit test at Clause 71.02-3, we need to accept that the character of our city has to continue to evolve.
Of course, making our planning system more effective is part of the solution but not the only lever government needs to be engaging. Increasing the supply of qualified trades and professionals to deliver the supply of housing is essential. Abolishing financial incentives for first home owners which only serve to drive up the price of housing. Investing in infrastructure in established areas where it is 4 times cheaper to provide and, of course, taxation reform, particularly with regard to stamp duty is a must to encourage people to be change housing to better reflect their needs.
Baby Boomers, I’m looking at you in your 4 bedroom home on 800sqm in middle Melbourne. We need a system that enables you to stay in your local community but move into a smaller, low maintenance home so that you can maintain your social connections without all the maintenance. The supply of diverse housing in your local area will then enable younger families to take advantage of larger homes and allow housing to better reflect the actual needs of the people living in them.
What we need is a Government willing to lead with courage and consider the needs of all Victorians, including future generations. I see the tide is turning and encourage more radical thinking and the tolerance of everyone to properly explore these ideas.