Victorian Population Boom – What it means for Property Development
Victoria is poised for a population boom and the housing market is not prepared. Based on data from the Urban Development Institute of Australia (UDIA), the last 2 years have seen Victoria fall short of property demand by 9,000 new properties. This is despite a record high level of property development. If the state’s population growth continues at this rate, by the year 2020 that shortfall would exceed 50,000 homes.
Victoria, more specifically Melbourne, will have to support more high density developments if they are to keep pace with the forecast population increase. Danni Addison, Victorian Chief executive of the UDIA has stated, “We’re simply not building enough to meet the demands of the population growth we’re seeing here in Melbourne.”
Bringing this into balance is a task the Victorian state government is finding tough. Although they are improving infrastructure and amenities to facilitate property development, they are facing resistance from some communities. Ernst and Young recently released their findings regarding key trends in residential development activity. Until now, town planning approval for developers, especially small developments, has been extremely challenging in Victoria, with a number going to VCAT for a ruling. This impacts cash-flow and time. We hope that the Ernst and Young expectation that recent changes to the Neighbourhood Residential Zone, such as the removal of the lot cap, will overcome some of these challenges. A swift Council approval process will allow Melbourne developers to meet the housing demand effectively.
The reality is the housing market needs to be able to accommodate the influx of residents. With a 12% increase in population growth, Melbourne is the third fastest growing region in Australia. The Victorian government must put plans in place to avoid a severe shortage of housing. Although at this rate a shortage is likely, they will be able to lessen the impact. Consulting with local communities to address the issue in a way that keeps their constituents happy while supporting the development of new residential dwellings.
It is not merely building new homes. The key lies in creating new residential zones that can cater to the needs of the residents. For example, creating employment opportunities, access to transport facilities and community amenities. Having the space to build homes is one thing. Implementing a new, self sufficient hub is something the government will need to focus on. It’s all in the planning.
With the urgency rising, as more and more people move in to the garden state, time is of the essence. The government will have to act swiftly to propose their plans, consult communities and then move towards the building phase. One step the government has made is streamlining the approval process for developers. This has worked favourably for 70 projects in 39 different council jurisdictions.
So far, Melbourne has effectively created affordable housing areas on the fringes of the city. Taking advantage of their geographical location. Although this is a great way to provide an entry point for home buyers and property investors, it’s not a sustainable solution without connection to infrastructure. It is not enough to have new residential areas with no prospects of local jobs, retail areas or an effective transport system. What the government needs is a cohesive development plan; effectively creating sub cities that will be able to establish their own social and economic centres. Don’t you think this is where people want to live?
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Do you think the Victorian government should equip new suburbs with facilities to ensure their thriving success? Or is this just a utopian view?
DISCLAIMER – Alleura recommends each individual seek the services of a qualified service provider before undertaking any financial investment. The information provided here is for general information purposes only. It is not intended as financial or investment advice.