Double the high-rises: Why density should be Melbourne’s destiny

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Key points

• Infrastructure Victoria has a plan to double the number of medium and high rise buildings in Melbourne’s city centre to around 130 more high rise apartments and 20 more medium rise apartments.
• Infrastructure Victoria estimates the state’s population will swell by 4.5 million people to more than 11 million people in the next 30 years. 
• Melbourne’s growing sprawl means it has approximately 1,600 people per square kilometre in comparison Paris has 3,900 people per square kilometre and Los Angeles has 2,200.

The number of residential high-rises in Melbourne’s CBD needs to double to keep up with the booming population and to slow urban sprawl, Victoria’s peak infrastructure body says.

Infrastructure Victoria has used a major new report to call for changes including building 130 more buildings taller than nine storeys in the city centre, setting targets for constructing new homes in established areas and replacing stamp duty.

A new Infrastructure Victoria report calls for strategies to end Melbourne’s sprawl.Credit: Joe Armao

It sounds the alarm on the social, environmental and economic costs if Melbourne’s growth continues to be predominantly in outer suburbs, where 56 per cent of the city’s development has been occurring.

Infrastructure Victoria chief executive Jonathan Spear said that without change, many Victorians would wind up with reduced access to high-quality jobs and businesses would be worse off.

“The current pathway of growth is more people living away from existing infrastructure in new suburbs on the urban fringes of our cities,” he said.

“The evidence shows that this delivers worse quality of life and opportunities for Victorians – but it’s not too late to turn that around.”

Melbourne’s growing sprawl means it has about 1600 people per square kilometre. Paris has about 3900 people per square kilometre and Los Angeles 2200.

In regional cities such as Geelong, Ballarat and Bendigo, the sprawl is even more stark, prompting Infrastructure Victoria to call on the state government to set urban growth boundaries around each regional urban area and update growth plans to include housing targets for regional cities.

The state’s population is estimated to grow by 4.5 million people to more than 11 million in the next 30 years.

Infrastructure Victoria is also calling for improved infrastructure planning that directly informs funding decisions; the removal of taxes and subsidies that drive sprawl; and planning changes to encourage more compact cities.

The Victorian government should also phase out stamp duty and consider replacing it with a yearly land tax, it found, as existing concessions for first home buyers and on properties valued up to $750,000 favoured new outer suburbs.

Spear welcomed the government’s new housing statement, which is aimed at building 800,000 new homes in Victoria over the next decade, but said it needed to go further to enable Melbourne and regional cities to be more compact.

“There’s some policy levers the government hasn’t pulled yet that will make a big difference to whether people continue to move in large numbers to the greenfield areas for our cities,” he said.

“Those policy levers are things like removing the first home owner grant and reforms to both stamp duty and infrastructure contributions by developers.”

The report sets out five scenarios: dispersed city; consolidated city; compact city; network of cities; and distributed state.

Dispersed city is the track Melbourne is already on, with growth focused on outer suburbs and detached homes. The consolidated city model would involve more growth in the inner and middle areas of Melbourne with medium density homes, while the compact city includes more growth in the centre through high-density living.

Under the network-of-cities model, regional centres would have many more homes, while the distributed state model would lead to more housing in regional towns and rural areas.

Infrastructure Victoria found the benefits of more compact cities included infrastructure cost savings of $59,000 for every additional new home, a $52 billion to $105 billion increase in overall housing value, 25 per cent more public transport use and 70 per cent less time spent in congested traffic.

A dispersed city would require 154,000 more cars than a compact city, meaning more congestion on roads and 17.3 million tonnes more emissions from trucks and cars.

Spear said more compact cities meant businesses could be up to $43 billion better off by 2056 compared with the dispersed model, via improved opportunities for hiring staff and connecting with customers and markets.

More compact cities also meant more land for agriculture and wildlife habitat, he said.

“A sprawling, dispersed city consumes an extra 30,000 hectares of land compared to a more compact city,” he said. “That’s equivalent to over 12,000 times the field size of the Melbourne Cricket Ground.”

Janette Corcoran, who lives in Docklands, said the benefits of city living included easy access to transport and amenities.Credit: Jason South

Infrastructure Victoria wants to see more people living in apartments like those in Docklands, where Janette Corcoran moved six years ago.

“I wanted to live specifically right in the CBD, right in the city. I wanted to actually have everything on my doorstep,” she said.

Corcoran, who is president of the Docklands Residents Group, said that while she missed the space of the larger homes she used to live in, she enjoyed the collegiality of the apartment building and the easy access to transport and all the city had to offer.

“There’s a whole range of reasons why apartments may not be best fit for some people and the obvious one is families and size,” she said.

“Until recently, Docklands didn’t have a primary school and so when families reached a certain size, they had to move out. But now that it’s here, they’re staying longer.”

Linda Allison, chief executive of industry lobby group the Urban Development Institute of Australia, said she had no issue with increasing density in established areas but that people should be able to choose where they wanted to live and the type of housing they wanted.

“Greenfields still play a very strong role in delivering housing supply, particularly at the moment where there are challenges in delivering medium to high-density housing solutions,” she said, referring to areas on Melbourne’s fringe.

Allison said there were about 20,000 permits for developments within Melbourne’s inner city that were “not coming out of the ground” because of feasibility issues.

“The industry cannot build new development and run at a loss; if the projects don’t stack up, they won’t get built,” she said.

Allison was also critical of Infrastructure Victoria’s push for greater contributions from developers for infrastructure.

“At the moment, over 40 per cent of the price of a new house is taxes and charges,” she said. “Any charge of that sort ultimately ends up being paid by the home owner.”

Emily Sims, spokeswoman for independent think tank Prosper Australia, backed Infrastructure Victoria’s push and said the infrastructure contributions regime should provide an important price signal to developers and home buyers.

“If the cost of delivering transport, pipes and poles is higher in outer-suburban areas, the infrastructure contributions should reflect that higher cost,” she said.

“Similarly, the environmental benefits of denser development should be factored in. Even if infrastructure contributions make some places infeasible to develop, we should be OK with that because it is directing growth to the places where the costs to the community and the environment are the lowest.”

The state government declined to comment.

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