Melbourne’s surplus of 8000 unsold apartments represents both a crisis and an untapped opportunity. While developers struggle with tied-up capital and key workers face housing stress, an innovative digital solution could transform this market failure into a win-win outcome for all parties.
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The Progressive Residential Affordability Development Solution (PRADS), to be developed by Housing All Australians in collaboration with Australian digital technology companies, offers a sophisticated approach to converting Melbourne’s apartment glut into affordable housing for essential workers. The solution combines developers discounting their asking prices to move stock with the government providing precisely targeted subsidies that make the economics work for all parties.
A market problem seeking a smart solution
The scale of Melbourne’s unsold apartment challenge is significant. Research from Charter Keck Cramer shows that these 8000 completed, but vacant units, represent 17 per cent of all apartments finished between 2020 and 2024.
Given that these apartments were built at below current construction costs, the surplus threatens to discourage and delay future development at a time when Melbourne desperately needs more housing supply.
For developers, unsold inventory creates cash flow problems that can prevent new projects from starting. For government and the community, it represents a lost opportunity to house key workers who are essential to Melbourne’s functioning but often priced out of the rental market.
Traditional government responses to housing affordability typically involve broad incentives that may not achieve optimal outcomes. PRADS offers a different approach: surgical precision in deploying public resources to maximise affordable housing creation.
How PRADS works: market solutions with purpose
The PRADS framework consists of two interconnected components that work together to unlock private sector investment in affordable housing.
The PRADS economic model allows government to create compelling financial incentives for property owners to commit their unsold apartments to affordable rental for key workers for an agreed period.
Rather than traditional compliance-based approaches, it transforms affordable housing from a regulatory burden into a commercially attractive investment opportunity.
The system works by placing legally binding restrictive covenants on property titles that ensure long-term affordability at below-market rents to qualifying tenants, while unlocking private investment for affordable housing at scale. This approach enables investors to benefit from targeted government incentives while providing sustainable rental housing for essential workers.
The PRADS register provides the digital infrastructure to make this system work at scale. More than just a database, it’s an intelligent platform that maintains a central register tracking every aspect of affordable housing delivery, from initial commitments through to ongoing tenant management.
Currently, most local governments keep negotiated affordable housing obligations on locally held Excel spreadsheets – a system that lacks transparency and effectiveness.
Surgical targeting of government incentives
Once operational, the PRADS Register becomes a powerful tool for governments to deploy incentives with unprecedented precision. Rather than broad-brush policies that may miss their mark, the system enables surgical targeting of exactly the right incentives in exactly the right places. Every local government can set specific income bands for the key workforce it needs to attract within its area.
For Melbourne’s unsold apartments, this means the government can identify which properties best align with key worker housing needs and, combined with appropriate developer discounts, assess the additional incentive needed for different locations and property types to secure below-market rental for an agreed period.
Once established and leased to qualifying tenants, PRADS tracks outcomes in real-time to continuously improve effectiveness.
The system could enable the Victorian government to offer stamp duty exemptions and land tax concessions for agreed periods, specifically for unsold apartments that commit to affordable rental for key workers.
The PRADS register ensures compliance is transparently monitored, maximising public benefit per dollar invested while guaranteeing that any public funds achieve their intended purpose of providing below-market rents to qualifying essential workers.
In collaboration with the federal government, removing GST on unsold stock could also be part of the financial equation, allowing the market to drive the delivery of affordable housing for key workers.
Real-time intelligence for better outcomes
The PRADS register provides the government with real-time market intelligence, enabling dynamic responses to changing conditions. It can identify where unsold or untenanted inventory is concentrated, assess which properties are most suitable for key worker housing based on proximity to employment centres and services, and track how different incentive structures perform across various market segments.
This data-driven approach ensures public investment achieves maximum social benefit. Instead of hoping that broad incentives will trickle down to create affordable housing, the government can see exactly how many affordable homes are created, where they’re located, and whether they’re reaching intended beneficiaries.
The transparency extends to the community as well. The register provides clear reporting on how public resources are being used and what outcomes are being achieved, creating accountability that is often missing from traditional affordable housing programs.
PRADS: A solution to help first home buyers
The PRADS framework also creates a unique pathway for first home buyers to enter Melbourne’s challenging property market.
By purchasing discounted apartments that carry below-market rental requirements, aspiring homeowners can start their journey toward homeownership by becoming investors first.
They acquire their first property at a significantly reduced price while generating rental income from key workers during the affordable housing period.
This approach allows first home buyers to benefit from existing investment property tax incentives while building equity, knowing that once the agreed affordable rental period expires and the requirement is lifted, the property can become their family home.