In our March issue, we look at the finalised statewide housing targets for Victoria, including the new townhouse codes and more. We also cover a snapshot of the Greenfield Market Report from Q4.
As part of the finalisation of Plan Melbourne, the state government’s housing targets for every council in Victoria to 2051 have officially been locked in. This equates to 2.24 million new homes, which is the equivalent of adding another whole Greater Melbourne!
If the target is to be achieved, an average of ~88,000 homes per year must be built. Even during the 2017/18 peak with an apartment boom, Victoria saw ~76,000 new home commencements (ABS). In 2020/21 when the Federal HomeBuilder Grant stimulated 29,000 new home build applications in Victoria (VBA), the target was still well short of ~67,000.
More homes for Victorians
New Townhouse code up to three storeys:
The Townhouse and Low Rise Code is set to be gazetted in April. The code is a significant update to Clause 55, where council discretion is replaced with deemed-to-comply (DTC) approval. DTC applications will be advertised but receive a fast-tracked approval with no further assessment or appeal rights. If the code is not met, the current process still applies. Existing controls such as heritage and landscape overlays will still apply. The code changes benefit ~14. million lots in established suburbs. It is unclear yet whether the code will override local schedule variations to Clause 55. A new code is also being developed for 4-6 storey apartment buildings, however the DTC provisions will not apply.
10-Pilot Activity centre height limits finalised (UDIA)
The changes include boundary reductions and lower height limits, with the height of ‘inner catchments’ behind core activity centres to be reduced from 6 storeys to 3 or 4. The 10-Pilot Activity Centres are in Broadmeadows, Camberwell Junction, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston and Ringwood and will assist in delivering 60,000 homes by 2051. The government has ‘unofficially’ flagged a proposed development contribution regime for development in the Pilot Activity Centres, from 1st January 2027.
Train & Tram Activity Centres increased to 50
The next 25 ‘Train and Tram Zone’ Activity Centres aiming to deliver more than 300,000 additional homes close to jobs, services and transport by 2051 have been announced. There was previously 25 announced in 2024. The announcement includes:
- Five stations along the Cranbourne/Pakenham line that will use the new Metro Tunnel: Caufield, Springvale, Noble Park, Yarraman and Dandenong Stations
- Four stations along the Frankston line: Glen Huntly, Ormond, Bentleigh and Mentone stations; with all level crossings on this line to go by 2029.
There are others on the Sandringham, Alamein, Glen Waverley, Upfield and Hurstbridge lines along with other selected ‘neighbourhood’ activity centres. The vision for the Train and Tram Zones will be prepared under a structure planning process by the state government in conjunction with local councils and residents. they’re aiming to complete them all by 2026, which is significantly faster than the current five-year time frame for a greenfield PSP. Existing controls such as heritage and landscape overlays will still apply.
Market Overview - Final quarter of 2024
In the last quarter of 2024, sales activity in Melbourne and Geelong’s growth corridors surged by 20% year-over-year. However, with affordability tightening, buyer sentiment remains cautious despite signs of recovery.
South East Corridor (SEC)
Residential lot sales in the SEC have been on a strong rebound, second only to the Western corridor, where prices are about 20% lower due to smaller lot sizes. The SEC’s average price per square metre currently stands at $1,181, compared to $1,085 in the West.
Since 2021, median lot prices in growth areas have risen by 16% in the SEC, while Melbourne’s overall median house price has dropped by 20% from its peak. However, when factoring in rebates and discounts, the actual decline is estimated at around 5–10%.
A rise in SEC sales, with the median lot price at $460,000, has contributed to an increase in the overall median. This effect becomes more noticeable when sales volumes are lower.
Most purchasing activity is coming from repeat buyers and investors rather than first-home buyers. A 25-basis point reduction in interest rates is expected to have minimal impact on shifting market sentiment.
Drouin and Warragul
Over the past year, lot sales in Drouin and Warragul have increased, yet available stock remains higher than in the previous two years, discouraging further development.
The median lot price has held steady at $325,000 for more than two years, with only a slight reduction in average lot size to 561sqm.
Since Warragul and Drouin maintain a price advantage at $569 per square metre compared to the SEC’s $1,181 per square metre, these markets are positioned as complementary rather than directly competitive.
