In just two years, Victoria has rolled out so many reforms aimed at getting millennials into their own homes that even those advocating for them are stunned.
“We’ve seen, in many respects, a planning policy revolution in Victoria,” says Brendan Coates, the director of the Grattan Institute’s housing and economic security program.
“I don’t think anyone in their wildest dreams would have expected that a state government would go as far as they have.”
For decades, the housing debate in Victoria was dominated by nimbys (not in my back yard) – residents determined to block new developments in their suburbs. But the tide has turned, driven both by a Labor government eager to win over younger voters and by the rise of the yimby (yes in my back yard) movement.
Yimby Melbourne formed in February 2023 after months of online discussions among like-minded people frustrated by the lack of affordable housing. Coates sits on its board.
Its lead organiser, Jonathan O’Brien, says the group assumed it would be a “grassroots movement” and focus on individual developments before local councils, where nimby influence has often dominated.
“But we have had a state government so willing to listen to the evidence, and so forward-thinking about our city, that we were able to make a lot more meaningful systemic change in two years than any other reform group,” he says.
O’Brien has repeatedly stressed the group is not linked to developers and has many older members. Half are owner-occupiers, he says.
Rapid responses
The group’s first major move, in April 2024, was a report advocating enforceable housing targets for local government areas (LGAs) and rezoning amenity-rich suburbs to accommodate thousands of new homes.
Two months later, the government announced its own LGA targets. Three months after that, the premier, Jacinta Allan, and her planning minister, Sonya Kilkenny, announced the rezoning of land around 50 train and tram stations, to the anger of some locals. (Ten “activity centres” had earlier been announced as part of a trial.)
The reforms didn’t stop there. The government has created a fast-tracked townhouse code, made it easier for homeowners to subdivide their blocks, scrapped car-parking requirements for new builds and overhauled the state’s infrastructure contribution scheme to ensure developers pay for schools, parks and roads.
Last month parliament also signed off on the biggest overhaul of the Planning Act in decades, slashing approval times to as little as 10 days and limiting appeal rights largely to neighbours. The government seemed to acknowledge the yimbys’ influence in a media release headlined: “A Planning System That Says Yes In My Backyard – Literally”.
Coates says Victoria’s reforms are much more ambitious than those rolled out in New South Wales over the same period.
A recent Grattan Institute report found the changes to the townhouse code and the 60 activity zones will increase zoned housing capacity in Melbourne by about 1m and 600,000 homes respectively, equivalent to 70% of the city’s existing housing stock.
By comparison the low and mid-rise (LMR) reforms and transport-oriented development in NSW could lead to 930,000 new homes in Sydney, 40% of its existing stock.
The townhouse code allows a fast-tracked planning process for duplexes, townhouses and low-rise apartments up to three storeys high, provided they meet certain requirements.
Coates says if Sydney were to introduce a similar code it would add capacity for more than 1m commercially feasible new homes.
But not everyone is convinced about the government’s plan. Much-publicised protests have been held in the well-heeled suburb of Brighton, where apartments of up to 12 storeys will be allowed. In nearby Elsternwick, a rally against three proposed housing towers was gatecrashed by four Yimbys, holding signs that read, “Let others live here too” and “Don’t be selfish, share Elsternwick”.
Kat Smith, a senior policy officer at Planning Institute Australia, welcomes the government’s willingness to consider new approaches, and its focus on reducing Melbourne’s reliance on growth areas for new housing. But she says there has been “very limited engagement with the planning profession”, particularly those who work in local councils and will be responsible for implementing many of the changes.
“From a planning perspective [the changes] do not form a coherent or integrated reform agenda,” Smith says. “Even though some elements have merit on their own, it is not clear how the various reforms fit together to deliver more housing.”
The PIA is particularly concerned about the “blanket” rezoning of land around train and tram stations, which it says fails to consider local context. It also says the townhouse code removes councils’ ability to take into account environmental hazards and factors such as access to public transport, the availability of essential services and local infrastructure when assessing planning permit applications.
Smith says “long‑standing landscaping and environmentally sustainable design requirements developed by individual councils over many years” have been “effectively switched off”.
She says planning issues should not be a “black-and-white debate” but some groups have “reduced the conversation to a simple binary in which development is either supported or opposed”.
“We do need more homes – urgently – but they must be homes that meet the needs and expectations of Victorians now and into the future,” Smith says.
Rising construction costs
Coates also warns that in some respects Melbourne has been a “victim of its success”. Because of the increase in housing stock, prices in Melbourne have become lower than in almost any other capital city, which in turn makes it harder for new developments to stack up financially.
This is compounded by rising construction costs, partly caused by the Victorian government itself, which has competed for building materials and labour through its “big build” of infrastructure projects – though that spending is now tapering off.
“If the Victorian government had done what it’s done this term in its last term, an enormous amount of that extra capacity would have been profitable to build,” Coates says.
“But we’re in a position now that construction costs have gone up but the cost of what you can sell an apartment for has barely moved.”
This tension shows up in the latest Procore/Property Council industry sentiment survey, released last month. Victoria’s property sector confidence is the lowest in the nation – 24 points below the national average, the widest gap ever recorded. Confidence in government planning and growth management is also the lowest nationally at minus 65 points. Two-thirds of respondents blamed the state’s tax settings.
While Coates notes property taxes are only “marginally higher” in Victoria than elsewhere, he says the foreign purchaser additional duty is “a problem”. The tax, which requires an international purchaser to pay an extra 8% in stamp duty, could “cut Melbourne off” from foreign investors who help kickstart new builds, he says.
The Victorian government rejects the criticism, saying first home buyers “shouldn’t have to compete dollar-for-dollar against cashed up foreign buyers”.
Both Coates and O’Brien say the next urgent reform must be heritage protection – 29% of residential land within 10km of the CBD is covered by a heritage overlay, the Grattan report shows.
“Enormous amounts of Melbourne are locked up under heritage – typically affecting old, mouldy homes that are share houses,” O’Brien says. “These are low-quality dwellings that could be much better used.”
