Developers don’t look away now…the week that was

Last year the Victorian State Government announced ambitious housing targets, committing to delivering 800,000 dwellings in greater Melbourne over the next 10 years, plus 425,600 new homes for regional Victoria by 2051.

Under increasing pressure to meet these targets, the Government has had a bumper week of housing-related announcements.

The Gadens Real Estate & Construction Team have prepared a round-up of this week’s announcements below.

Sunday, 20 October 2024 – Expanded Activity Centre Program 

50 new ‘Train and Tram Zone’ Activity Centres have been proposed to help deliver more than 300,000 additional homes across Melbourne by 2051. The 50 new ‘Train and Tram Zone’ Activity Centres are in addition to the 10 initial Activity Centres announced earlier this year.

The vision for the ‘Train and Tram Zone’ Activity Centres is that the taller buildings will be situated in the immediate ‘core’ where the train station and built-up commercial centre is located, with gentler, scaled height limits and more low-rise apartments and townhouses in the surrounding 800 metre walkable catchments.

The first 25 ‘Train and Tram Zone’ Activity Centres will consist of:

• Seven centres connected to the new Metro Tunnel will have a service boost on new trains (Carnegie, Hughesdale, Murrumbeena, Oakleigh, Middle Footscray, West Footscray and Tottenham Stations).
• Six centres along the Belgrave/Lilydale Line (and the existing Camberwell and Ringwood activity centres) benefit from 5-minute peak services (Hawthorn, Glenferrie, Auburn, Blackburn, Nunawading and Mitcham Stations).
• Four centres along the Frankston Line located at Toorak, Hawksburn, Armadale and Malvern Stations.
• Four centres along the Sandringham Line located at North Brighton, Middle Brighton, Hampton and Sandringham Stations.
• Two centres along the Glen Waverly Line located at Tooronga Station, Darling Station, plus a combined centre covering both Gardiner and Glen Iris Stations.
• Two ‘neighbourhood activity centres’ at Toorak Village and Middle Footscray are planned for modest growth.

The remaining 25 of 50 ‘Train and Tram Zone’ Activity Centres will be announced in late 2024, as part of the release of the Plan for Victoria.

The announcement was met with protests in Brighton.

Useful links:

• We Need More Homes Close To Train Stations And Trams | Premier
• Victorian government announces 50 higher-density housing development zones across Melbourne – ABC News

Monday, 21 October 2024 – Expansion of off the plan concessions

The Victorian Government announced the temporary extension of the existing stamp duty concession, so that it now applies to all off-the-plan property purchases. An overview of the policy is provided below.

• Previously the off the plan duty concession was only available in limited circumstances, substantially contingent on whether you were a first home buyer and other capped contract pricing.
• The extended concession:
  • will be available for off the-plan contracts for dwellings (including apartments and townhouses) entered into from 21 October 2024, for a period of 12 months; and
  • applies with an uncapped purchase price and is available to all buyers, not just first home buyers with foreign buyers now able to access the concession.
• There are concerns from the buyers perspective, as noted by Brendan Coates, the Grattan Institute’s Housing and Economic Security Program Director, that the one-year timeframe may not provide sufficient opportunity for buyers to save, search, and secure their new homes.
• Some developers voiced concerns that the stamp duty concessions (or any other monetary incentives) do not assist developers to bring stock to market. Due to the high cost of construction, the purchase price for apartments would need to increase significantly (and at a price currently unaffordable for the majority of buyers) to enable developers to commence development. Accordingly, despite the incentive for buyers to return to the market, supply of affordable apartments is likely to remain an issue.
• The off the plan stamp duty concession is not available for vacant land lots bought off the plan. The omission of this segment of the market is disappointing given the more affordable price point of this type of stock.

Useful links:

• Off-The-Plan Stamp Duty Concessions To Build More Homes | Premier
• State Revenue Office FAQs

Tuesday, 22 October 2024 – Infrastructure contributions reform

The Government announced an overhaul of the way local infrastructure contributions are to be made by developers:

• Currently, developer contributions in suburban areas have been made by way of DCPs and public open space levies. It is understood that those contributions and levies would be scrapped and replaced with the new local infrastructure contribution.
• The new infrastructure contribution system has been labelled ‘GAIC for the suburbs’. Under the new system, the State will take over the collection of the contribution and the administration of the funding for community infrastructure and services, rather than Local Councils.
• The new infrastructure contribution system will be piloted in 10 activity centres being Broadmeadows, Camberwell, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston and Ringwood.
• A working group will be established with the Victorian Government and Housing Affordability Industry Partnership to spearhead the initiative to review and implement the remodelled developer contributions.
• It remains unclear how the new developer contribution will be distributed to the Local Government Areas, particularly when there are already concerns regarding the success of the GAIC framework in delivering the infrastructure and community services to greenfield communities which GAIC was meant to fund.
• Given Councils are currently in caretaker mode pending the upcoming Council elections, they have been unable to respond to the proposed changes following the announcement.

Wednesday, 23 October 2024 – 10 year plan for Melbourne’s greenfields

A 10-year plan (Plan) is proposed to deliver 180,000 homes in greenfield areas across Melbourne’s outer south-east, north and west as follows:

• 27 new Precinct Structure Plans (PSPs) are proposed in the areas shown on the map below, which are split into Horizon 1, Horizon 2 and Horizon 3 – to be prepared and completed between 2024/5 and 2033/34 (in three tranches).
• 22 PSPs are proposed to be completed by 2034-35 – 10 years from now.
• The first 3 greenfield PSPs to be released in 2024–25 include:
• Northern Freight Precinct, an employment precinct in Whittlesea.
• Cardinia Creek South Part 2, a residential precinct in Cardinia Council.
• Kororoit Part 2, the western corridor within Melton Council.

The Plan also proposes that PSPs are completed within 3-4 years from commencement. There is a ‘goal’ to reduce this completion time by a third.

From 1 January 2025, the Victorian Planning Authority will become integrated with the Department of Transport and Planning.

Whilst the release of the 10 year plan provides some certainty to the industry, it fails to address the ongoing delivery delays affecting greenfield development, particular as a result of CHMP, Melbourne Water and other authorities issues.

Source: The Victorian Government, Department of Transport and Planning

Useful links:

• A Decade’s Worth Of New Family Homes And Backyards | Premier
• Victorian government housing plan for Melbourne’s fringe panned for being ‘too little, too late’ and ‘lacking detail’ – realestate.com.au

Wednesday, 23 October 2024 – Unlocking surplus VicTrack land for homes 

Through unlocking and rezoning surplus VicTrack land, the Government plans to deliver around 9,000 homes across 45 sites in both metropolitan Melbourne and regional Victoria.

It is proposed to:

• Progress more housing projects in four suburbs with train stations.
• Prepare to release ten further surplus sites to the market for home development.

Two VicTrack sites near Oakleigh and Footscray stations – along with the Metro Tunnel’s train line, will be released to market later this week (by 27 October 2024). The successful bidders will determine the type of housing at each site and will be required to start construction within 18 months (the EOI and Request for Proposal process will be overseen by VicTrack).

Over the coming months, Government will release an estimated additional ten VicTrack sites to the market. These opportunities are expected to deliver 500 more homes across the state.

Useful links:

• Government Land Unlocked For More Homes Near Trains | Premier

Thursday, 24 October 2024 – I want to be the Premier who got millennials into homes

Speaking at the Melbourne Press Club on Thursday, Premier Jacinta Allan announced a review of subdivision regulations to streamline the process for two lot (and potentially larger low density subdivision), without a permit.

The purpose of the policy is to stimulate low density and townhouse development within established suburbs, seeking to further the Government’s stated 70/30 aim.

Useful links:

• I Want To Be The Premier Who Got Millennials Into Homes | Premier

Friday, 25 October 2024 – $1 billion Regional Housing Fund

The Government has announced a $1 billion Regional Housing Fund, committing to:

• the delivery of 1,300 social and affordable housing across Victoria. The location of the first 1,000 homes will be
• • 68 homes in Mallee
  • 98 homes in Wimmera South-West
  • homes in Loddon
  • 34 homes in Central Highlands
  • 238 homes in Barwon
  • 140 homes in Goulburn
  • 110 homes in Ovens Murray
  • 65 homes in Outer Gippsland
  • 110 homes in Inner Gippsland
• To boost planning capacity in regional councils, the Government has announced that it will contribute $500,000 towards a Regional Planner Cadetship Program.
• Government has also committed delivering a Regional Planning Hubs program which places planning experts in regional and rural councils to support the planning and development of their local community.

Useful Links

• More Homes Mean More Opportunity In Regional Victoria | Premier

Next steps

This suite of reforms will have a significant effect on every aspect of the property development industry and will need to be carefully considered to fully understand the impacts these changes will have on the feasibility of development projects – in an already challenging market.

Meaningful industry and community consultation is also required, to ensure that the proposed changes reflect the needs of industry and the community and will ultimately result in the delivery of increased housing at increased speed.

Through its professional memberships with the UDIA and PCA, Gadens is actively participating in industry-led submissions to Government in response to these reforms.

These announcements will also be front and centre of our expert panel discussion at the Gadens Property Developers Forum, being held at our Melbourne office on 21 November 2024. Please click here to register if you would like to attend this event.

In the meantime, if you have any queries about any of this week’s announcements, please contact our team.

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Authored by: 
Andrea Towson, Partner
Brihony Boan, Partner
Maria Anenoglou, Senior Associate
Zoe Christodoulou, Senior Associate
Montana Pirruccio, Associate
Madison Campion, Lawyer