Victoria is facing a very serious housing affordability crisis. Since 2016 the median lot price for a plot of vacant land in one of Melbourne’s growth corridors has risen from $212,000 to $307,000, while household incomes have only grown by $18,000 over the same period. This is before elevated construction costs due supply chain issues and labour are factored into the cost of a new build. Most Victorians are feeling the pinch, and many are now in a situation where they are committing over 30 per cent of their household income towards keeping a roof over their heads, which is the definition of housing stress for low-income households.
While this situation has come to a head during the Federal and State election campaigns, this scenario has in fact been building up over decades. The delivery of new housing is heavily dependent on the certainty provided by having an adequate supply of available land for development. Developers cannot access the affordable capital necessary to fund these ventures unless potential investors are confident they will yield a suitable return, meaning less houses are built – reducing supply and directly impacting the cost of housing for homebuyers, investors and renters.
Victorian Executive Director of the Property Council Cath Evans said that the consequences of not building enough new and affordable housing in our state are dire, especially for those that need it the most.
“The people that are bearing the brunt of this housing affordability crisis are first home buyers, key workers and young people looking to rent. We are seeing a generation locked out of housing through no fault of their own,” said Ms Evans.
“This research by Urbis clearly shows that there is as little as three years’ worth of available active land supply in Melbourne’s key growth areas and 9 years in Geelong. These are the areas where most Victorians have bought new homes in recent years. For example, the South-east growth corridor, which has grown from a population of 277,290 residents in 2006 to 482,890 in 2021, currently has no new residential Precinct Structure Plans in the pipeline. This situation, based on very conservative interpretation of historical consumption trends, indicates there is only 6.6 years’ worth of land supply left in that corridor,”
“Unfortunately, the data also clearly shows that apartments are not making up for the expected shortfall, with less than 25,000 to be added over the next five years – fewer than 5000 per year on average. This has significant implications for the type of city we’re building as well as the provision of housing in places that people want to live.” said Ms Evans.
“This situation is now critical and requires action immediately from whoever wins the election. Our industry needs to be seated at the table with the government within weeks so that we can begin putting in place the policy solutions needed.”
The Property Council and Urbis have distilled several key recommendations for both parties as the state election draws near. These include:
- An urgent review of the urban growth boundary
- The expedited unlocking of government-owned land
- Prioritization of higher density housing around existing transport hubs
- Setting local housing targets and ensuring local government is accountable for meeting them
- Establishing the Victorian Housing Supply Council to collaborate with its recently created Federal counterpart
ENDS
Media contact: Dominic Raff | 0478 819 525 | [email protected]