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Residential Development Review 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
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