The ambitious Victorian Housing Plan announced yesterday will take time to be tested. The shortage of housing (and particularly rental accommodation) has been prominent in the press over the last 6 – 12 months with calls for urgent action.
While the housing industry has failed to keep pace with demand, we can not let it fail any longer. Unlike when other industries like automotive or textile failed, off shoring our housing construction industry is not an option.
Some may argue various government controls and duties contributed to the current problem, so they have the responsibility to get it back on track.
Industry groups and commentators have been debating the cause and best remedies for some time. The only thing they all agree on is that it is a supply issue. We need more homes and especially homes to rent.
After months of anticipation, the Victorian Government yesterday released its housing plan. It is designed to ease the accommodation shortage by generating the construction of 800,000 new homes over 10 years.
Most of the initiatives look to apartment developments as the solution. This includes everything from conversion of offices, redevelopment of existing social housing buildings, and apartment development around transport hubs.
The measures are all designed to either speed up delivery of existing residential projects or free up new ones.
Despite all the initiatives announced, construction of new apartments takes some years and the population continues to grow daily. Nothing in the plan addresses the short term problem. Even if the ambitious plan of 80,000 new homes every year for 10 years is achieved, it only just covers predicted population growth. Victoria’s population is predicted to grow from 6.8 million today by about 50% to 10.3 million by 2051.
Victorian councils (who are losing some of their planning jurisdiction) say there are already 120,000 dwellings approved and ready to be built. They argue planning is not the problem and all the new system does is remove local residence from the consultation process.
If the cost of construction remains prohibitive, development projects that remain unviable won’t be built. A fast or clear planning process won’t change this.
The full details of the announcement can be read here in the Victorian Housing Statement.
Some details and specific timing is yet to be confirmed, but here are the main initiatives as announced.
- Fast tracking town planning approval for larger developments.
- Streamline the approval for developments of up to 4-5 storeys.
- Process 1400 permit applications sitting with councils for over 6 months.
- Removal of permits for granny flats and larger blocks with some conditions.
- New planning controls to enable 60,000 new apartments in 10 suburban activity centres.
- Review 80 buildings with the potential for conversion to 10,000 – 12,000 apartments.
More social and affordable housing is a common theme with a requirement for developers to provide 10% affordable housing within the project for it to qualify for a fast tracked planning approval.
Melbourne has 44 aging social housing towers that pop up on our inner-city skyline. All of these will be demolished and replaced over the next 30 years. These sites will be progressively redeveloped in partnership with the private sector to provide new social, affordable and market housing. This process will replace 10,000 old apartments with about 30,000 new ones. A careful process of managing the needs of existing residents will be caried out.
Rent controls remain off the table with a selection of tweaks to the rental rules announced. These include things like a portable rental bond and changing the rent increase and eviction periods from 60 to 90 days. None of these changes will impact on rental rates or costs to owners or renters. Wood Property will update you on these changes when the detail is available.
One of the more headline grabbing announcement was a 7.5% tax on short stay accommodation such as Airbnb. This will help fund the social housing initiatives and may sway some owners to move from short term rental to longer term rental. The tourism sector suggests this tax will push the tourism dollar interstate or away from other travel spending.
Regardless of whether the headline target number of 800,000 new homes is met in 10 years’ time, the majority of changes are a welcome acknowledgement of the challenges in the apartment and housing markets.