Residential Development Review
A monitor of housing development, land supply and transport infrastructure
Melbourne Edition March 2019 Directors’ Highlight
Contents
This Residential Development Review aims to provide key Recent Dwelling Approvals statics and growth trends in Victoria over the past five years, Planning approvals of dwellings per local 04 government area across metropolitan Melbourne and compares these to recent dwelling approval data, over the second half year of 2018 future population growth, land supply and infrastructure delivery across Greater Melbourne’s central, middle and Dwelling Approval Trends greenfield growth areas. Planning approvals of dwellings across metropolitan 06 Melbourne over the past five years total Melbourne is currently the fastest growing city in Australia, adding approximately 100,000 people per annum on average, with the majority of that growth coming from Growth Area Development Capacity overseas migration. Over the past five years, the majority The status of Precinct Structure Plans and development 08 capacity in Melbourne’s urban growth areas (in the of detached dwelling approvals and growth has been in Urban Growth Zone). the greenfield growth areas in the southeastern, northern and western regions. Growth areas in these regions in the Infrastructure pipeline second half of 2018 were above the five-year average. There An overview of the current transport infrastructure has otherwise been a gradual decline in overall dwelling 10 projects under planning or construction in Melbourne’s metropolitan area approvals for Greater Melbourne, led by a decline in apartment approvals and flattening of detached dwelling and townhouse approvals since the end of 2017, and a sharp decline in apartment approvals in the Central Region in the second half of 2018.
After many years of limited investment, Melbourne is experiencing its highest volume of major infrastructure projects under construction. Major projects including Melbourne Metro and Level Crossing Removal, West Gate Tunnel and CityLink Tulla Widening are all under construction and expected to be delivered by 2025, delivering much needed infrastructure improvements across Greater Melbourne. Future projects in planning, such as the Airport Rail Link and Suburban Rail Link are city shaping projects that will have a substantial impact on the efficiency of the city.
We trust that this publication is of interest and provides insight into the growth trends across Melbourne and is helpful when considering future development in Victoria. Should further detail be sought, please contact our office and DISCLAIMER we would be happy to discuss. The data from this document has been collated by Mecone from various government sources. While care has been taken in preparing the document, Mecone takes no responsibility for the accuracy of any of the information contained within this document. This document is Ben Hendriks Danny Hahesy for informational purposes only and should not be relied upon for any Manging Director Practice Director (VIC) reason without first independently verifying the data.
2 | MECONE >> Residential Development Review Growth Outlook Melbourne to 2031
From 2015 to 2031, the population of Victoria is projected to housing to cater for the increasing population together grow by 1.8 million, from 5.9 million to 7.7 million, at a rate of 1.7% with increasing need for one and two person housing types, per annum. Most of this growth is to occur within the Greater retirement living and aged accommodation. Melbourne Capital City Area, which is projected to reach a Victoria is expected to add approximately 850,000 additional population of 5.1 million by 2021, growing to 6 million by 2031. dwellings to Greater Melbourne and approximately 210,000 The key drivers of this population growth are primarily from net additional dwellings to regional Victoria to 2031 to accommodate migration and natural increase. Net overseas migration accounts an additional 1.8 million people. The rate of growth is for between 52% and 60% of annual population growth over the approximately 100,000 people per annum on average. This projection period. Net interstate migration makes a relatively makes Melbourne the fastest growing cities in Australia. small contribution to Victoria’s population change but has added Past and projected dwelling approvals data confirms that as much as 13,000 to Victoria’s growth in recent years. The dwelling approvals in Greater Melbourne have kept up with second highest driver of population change is fertility rates over household formation in recent years, with more approvals the period, accounting for approximately 32% and 40% of annual generated than households formed, with projections for this population growth. trend to continue. While dwelling approvals are higher than Household formation is related to the age structure of the household formation each year, these do not all translate to population, partnering trends, the age at which children leave construction commencements and there can also be a lag of up home and a range of other factors. The older age structure to two years between approval and completion of development. projected for the future contributes to an increased proportion of one and two person households in Victoria. Changes to household formation and aging of the population will create demand for a wider variety of housing types and additional
7,733,259 7,170,957 6,605,653 6,048,767 5,931,007 Population 5,482,776 of Victoria 5,025,182 4,558,692
Population of Greater Melbourne
2,363,103 2,167,322 1,974,175 1,778,405 Total number of households in Greater Melbourne
Total number of dwellings approved across metropolitan Melbourne Additional number of households projected per year across metropolitan Melbourne
60,000 Source: ABS Household and Family Projections 40,000 (3236.0), 2011 to 2036 and 2016 to 2041. State 20,000 Government of Victoria, Victoria in Future 2016 0
2014 2015 2017 2018 2019 2020 2022 2023 2024 2025 2027 2028 2029 2030 2016 2021 2026 2031
MECONE >> Residential Development Review | 3
./012!34256 Recent Dwelling Approvals Planning approvals of dwellings per local government area across metropolitan Melbourne over the second half year of 2018 Source: ABS Building Approvals (8731.0), Dec 2018
Dwelling approvals for the second half of 2018 were highest The remaining municipalities with a relatively high proportion of in Melbourne’s growth areas, with the three highest dwelling dwelling approvals are found in the south-east and north-east in approvals in Wyndham in the south-west, followed by Casey Stonnington, Monash and Manningham. in the south-east and Hume in the north. These coincide with Councils with the highest recent dwelling approvals also the coordinated release of land for affordable housing in these exceeded their five year average over the past six months. locations. These regions account for the largest proportion of detached housing across metropolitan Melbourne followed Stonnington has recently approved the most apartments, being closely by growth area municipalities in Whittlesea and Melton. the only local government area in the Central Region with a
4 | MECONE >> Residential Development Review Recent Dwelling Approvals July-December 2018 Houses Townhouses Apartments
3,000
Half-year average over the past five years
2,500
Central Eastern Northern Southern Western Region Region Region Region Region
2,000
1,500
1,000
500
0
Yarra Knox Casey Hume Melton Monash DarebinBanyule Cardinia Bayside Moreland Glen Eira Kingston Whittlesea Nillumbik FrankstonWyndham Brimbank Port PhillipMelbourne WhitehorseBoroondara Maroondah StonningtonMaribyrnong Yarra Ranges Hobsons Bay Manningham Moonee Valley Greater Dandenong Mornington Peninsula
substantial number of apartment approvals. Dwelling approvals Boroondara and Glen Eira, Moonee Valley, Moreland and generally across the rest of the Central Region was less than Hobsons Bay also contributed to a broader range of dwelling 500, with the City of Melbourne approving approximately 3,000 types, with most of these municipalities containing middle dwellings below their five year average. ring suburbs.
Monash Council had the most consistent mix of dwelling approvals by type, with a broad range of detached housing, townhouses and apartments. Manningham, Whitehorse,
MECONE >> Residential Development Review | 5 Dwelling Approval Trends Planning approvals of dwellings across metropolitan Melbourne over the past five years total Source: ABS Building Approvals (8731.0), 2013/14 - 2018/19
6 | MECONE >> Residential Development Review Five-Year Total Dwelling Approvals January 2014 – December 2018 30,000
25,000 Total
20,000
By Type
15,000 Houses
10,000 Apartments
5,000 Townhouses
0
HY2, 2013 HY1, 2014 HY2, 2014 HY1, 2015 HY2, 2015 HY1, 2016 HY2, 2016 HY1, 2017 HY2, 2017 HY1, 2018 HY2, 2018
By Region
10,000
5,000
Central Eastern Northern Southern Western 0
HY2, 2013 HY1, 2014 HY2, 2014 HY1, 2015 HY2, 2015 HY1, 2016 HY2, 2016 HY1, 2017 HY2, 2017 HY1, 2018 HY2, 2018
Total dwellings approvals increased sharply in the second half of The Central Region is driving a sharp drop in dwelling approvals 2014 before stabalising between 25,000 and 30,000 dwellings in Melbourne’s inner ring which closely follows the drop in total through to the end of 2017. In the second half of 2018 there apartment approvals over the period. was a gradual decline in approvals down to just below 25,000 The Central Region accounts for the majority of apartment dwellings, led by a sharp decline in apartment approvals and approvals. With a projected increase in demand for one and flattening of detached dwelling and townhouse approvals since two-person households over the longer term to 2031, and the end of 2017. dwelling approvals tracking closely with household composition over the period. Further reduction in apartment approvals in the short term may point to reduced supply and increasing demand in future years.
MECONE >> Residential Development Review | 7 Growth Area Development Capacity The status of Precinct Structure Plans and development capacity in Melbourne’s urban growth areas (in the Urban Growth Zone) Source: Victorian Planning Authority, Precinct Structure Plans (February 2019)
Northern & Western Growth Corridors
Northern & Western Growth Corridors
Southeastern Growth Area Precinct Structure Plan (PSP) Status Growth Corridor As of February 2019
8 | MECONE >> Residential Development Review Land Area (ha) 40,000 100,000 160,000 Melbourne’s growth areas are expected to accommodate 30% to 35% of Melbourne’s new
Land in the Urban Growth Zone housing (Plan Melbourne) and currently deliver Cardinia 2 PSPs 4 PSPs approximately 22,000 new lots annually over In completed PSPs: Number of total lots identified 13,000 lots (41% developed) (% of residential lots developed*) the past few years. Recently, Wyndham and Hume have been Victoria’s leading growth areas In yet to be completed PSPs experiencing the highest growth in housing. Casey 16 PSPs 6 PSPs Detached housing within the growth area 166,437 lots (9% developed) municipalities continues to grow, representing relatively affordable housing within the Melbourne Hume 11 PSPs 9 PSPs residential market.
259,921 lots (4% developed) Compared to other growth area regions, the south-east growth area has less supply of Precinct
Melton 14 PSPs 11 PSPs Structure Plans (PSPs) either approved or yet to be approved. This is largely due to the more mature 251,286 lots (3% developed) market in the south-east compared to the north and western regions. Cardinia and Casey council Whittlesea 9 PSPs 5 PSPs have only 10 PSPs that are yet to be approved. 302,288, lots (3% developed) The northern growth region, Hume and Whittlesea, have 14 PSPs yet to be approved and the western Wyndham 17 PSPs 6 PSPs growth region, Melton and Wyndham, have a
202,791, lots (9% developed) combined 17 PSPs to be approved.
As of November 2017, 41% of lots within the * Percentage of lots developed (dwellings constructed or under construction) between 2015 and November 2017 Source: Department of Environment, Land, Water and Planning, Urban Development Program 2017 Report approved PSP areas in Cardinia have already been developed which is clearly the highest percentage Southeastern Growth Corridor across all growth areas followed by Casey with 9%. The other growth areas typically have only 3% to 4% of approved PSP land developed. This suggests that the supply of approved PSP land in the south- east growth region is limited and additional zoning will need to occur.
Within each of the growth areas, land that has already been approved and developed typically occurs adjacent to established townships and suburbs where infrastructure is available.
The delivery of housing in the growth areas is dependent on infrastructure availability and civil construction, with typically a considerable lag between the pre-sales of lots and settlement of land.
Both sides of Parliament have indicated support to lock away Melbourne’s Urban Growth Boundary in perpetuity. This will place pressure on the timing and delivery of housing within the nominated growth areas.
Growth Area Precinct Structure Plan (PSP) Status As of February 2019
MECONE >> Residential Development Review | 9 Infrastructure Pipeline An overview of the current transport infrastructure projects under planning or construction across metropolitan Melbourne Source: Australian Government, Build Our Future. State Government of Victoria, Victoria’s Big Build
Committed public transport infrastructure projects Committed and planned public transport projects
After many years of limited investment in major infrastructure new underground stations at North Melbourne, Parkville, State projects, Melbourne is experiencing its highest volume of major Library, Town Hall and Domain. The project has a value of over $11 infrastructure projects under construction. Major projects billion and is expected to be developed by 2025. The outcome including Melbourne Metro and Level Crossing Removal, will result in increase in capacity across the rail network. West Gate Tunnel and CityLink Tulla Widening are all under The Level Crossing Removal project continues to remove a construction and expected to be delivered by 2025, delivering total of 75 level crossings across metropolitan Melbourne, with much needed infrastructure improvements across the 29 already removed from the original tranche of 50 crossings. metropolitan Melbourne area. The project seeks to improve safety, movement and frequency. Melbourne Metro includes the construction of a new metro The cost of the 50 highest priority crossings is estimated at tunnel and upgraded stations including twin 9km rail tunnels $8.3 billion. from the west of the city to the south-east, construction of five
10 | MECONE >> Residential Development Review Early Works Business Case Project Planning Corridor Protection Major Construction
Estimated PUBLIC TRANSPORT PROJECTS completion
Mernda Rail Extension 2018
Hustbridge Line Service Upgrade 2022
Level Crossing Removal 2022 / 2025
Cranbourne Line Upgrade 2023
High Capacity Metro Trains 2023
Metro Tunnel 2025
Melbourne Airport Rail Link 2031
Suburban Rail Loop TBC
Monash Rail TBC
Frankston to Baxter Link TBC
Metro to Melton / Wyndham Vale TBC
Fast Rail to Geelong TBC
Estimated ROAD PROJECTS completion
Monash Freeway Upgrade 2018
Chandler Highway Upgrade 2019
CityLink Tulla Widening 2019
Mordialloc Freeway 2021
West Gate Tunnel 2022
M80 Ring Road Upgrade 2023
North East Link 2026
The West Gate Tunnel is under construction and will create The Airport Link project is a rail link to Tullamarine Airport a new tunnel connecting from the West Gate Freeway to City from the CBD, currently under planning. Melbourne Airport Link to ease traffic congestion on the West Gate Bridge which, is Australia’s second busiest airport and is proposed to be due to the substantial growth occurring in the west, currently expanded under a current master plan. has more than 200,000 vehicles a day. The Tunnel is due to be The Suburban Rail Link is a major project in planning which is completed by 2022. expected to commence construction in 2022. The project will include Planning is also underway for a number of further major 12 new stations and connections to the proposed airport link. infrastructure projects with the Suburban Rail Loop, Tullamarine The proposed North East Link connecting the M80 Ring Road to Airport Rail Link and the North East Link in the planning and the Eastern Freeway will complete a long term missing link in the business case stage. The projects are expected to continue north-east with the $16 billion project due to be completed by Melbourne’s infrastructure program for an extended period. 2027. The project is still in planning stage.
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