New residential zones being considered by Victoria could act to preclude medium density development in inner Melbourne suburbs.

29 April 2014 — New residential zones being considered by Victoria could act to preclude medium density development in inner and middle Melbourne suburbs, senior planners have warned the Victorian Government.

The letter, a submission to the Residential Zones Standing Advisory Committee by 35 top planners and consultants, said that new residential zones being considered by planning minister Matthew Guy would “severely curtail” the supply of medium density housing, as well as increase land values for the rich while depressing land values for the poor.

It stated that under proposed changes there was a “real danger that opportunities for providing affordable housing, special purpose housing and older persons units, including community housing, will be severely curtailed”.

The letter suggested that the changes could see between 2000-4000 fewer medium-density houses built each year.

“It is not known what the final outcome for the zones will be. However, the direction of change is known – it can be said with certainty that production will be severely curtailed. The new residential zones will dramatically constrain the supply of medium density housing.”

A reduction in medium-density housing of 2000 units would represent $400 billion in lost revenue, and lead to increased costs associated with urban sprawl, the letter stated.

“The State Government and community will incur major costs associated with urban sprawl. At $100,000 per dwelling for 1000 dwellings for new infrastructure, this is a hit on the budget of $100 million per year.”

Councils impeding medium density

There are three reformed planning zones councils are currently amending their planning schemes to fit: general, growth and neighbourhood.

The letter warned that councils were applying to employ the restrictive neighbourhood residential zone across “vast tracts of existing residential zoned land”.

Under this zone, all development would be limited to single or dual occupancy with a maximum height of eight metres.

“The current rollout of the new residential zones will throw the medium density baby out with the bathwater,” the letter stated.

The move could also act to increase land values in rich areas while depressing them in poorer areas.

“The impact on land values will be uneven. For example, extension of the [neighbourhood residential zone] in higher value inner areas, which already disproportionately enjoy the benefits of significant past infrastructure investment by the State, will support higher values of the existing housing stock and make incumbent residents wealthier. In lower value areas, where the stock is more likely to be obsolete and in need of redevelopment, it will depress land values making incumbent residents less wealthy.”

However, the letter stated that if the planning system changes were applied properly, they could have positive sustainability outcome.

“The new residential zones present an invaluable opportunity to enhance the liveability and sustainability of our middle-ring suburbs by facilitating modest increases in density that will support expanded local services. This does not require widespread use of the [residential growth zone], merely its selective use in most neighbourhoods (for example, along main roads and around stations) along with more judicious use of the [neighbourhood residential zone]. This opportunity appears to have been wasted.”

According to The Age, all of Melbourne’s inner city councils had applied to restrict residential growth zones in most areas, with Port Phillip suggesting only 1.2 per cent of land was suitable for high-rise development.

It noted that the Property Council of Australia’s Victorian executive director Jennifer Cunich had expressed concern about banning apartment blocks across inner and middle Melbourne, a move she said would “see whole areas locked up and people locked out”.