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Melbourne’s recently claimed title as Australia’s most populous city won’t be cause for lengthy celebrations unless the government and industry act to resolve current supply constraints.
A redrawn city boundary has led to the Victorian capital overtaking Sydney as the nation’s most populated city for the first time since 1905, with the updated boundary seeing Melbourne envelope a formerly regional patch, Melton — with a population of 178,960 — into its city limits.
Due to this, Melbourne’s “significant urban area,” which measures a city’s boundary by contiguous urban population above 10,000, exceeds Sydney’s.
In the Real Estate Institute of Victoria’s (REIV) view, the new boundary and its associated title as Australia’s “biggest city” highlight a growing need to get on the front foot with housing related initiatives.
A spokesperson from REIV told REB the capital’s growing population will increase demand in both housing and rentals within the city as “newcomers will need to find suitable accommodation.”
“This data shows that decisions regarding policy cannot be pushed out for another day, they must be addressed promptly so we are better prepared and can maximise this opportunity for Victoria’s economy.”
Given Melbourne’s ever-tightening rental market, which has fallen from 2 per cent in the first quarter of 2022 to 0.7 per cent in the equivalent period this year, “is already feeling the squeeze”, the REIV spokesperson stressed the need for “legislators [to] understand and value the importance of the mum and dad investors who are the largest suppliers of rental housing in Victoria.”
Helen Yan of Ray White Balwyn — the number one female real estate agent in 2022 according to REB’s rankings — said the news “highlights the issue of accommodating population growth in the city’s property market.”
Despite her belief the city is currently capable of managing the growth, she noted that “it requires careful planning and coordination between the government and private sector,” a factor especially important in guaranteeing that affordable housing supply keeps up with population growth, especially for low-income and vulnerable group households.
Moving forward however, Ms Yan believes it remains to be seen whether the new housing and unit developments in Melbourne’s pipeline are sufficient enough to accommodate sustained growth over the medium-to-long term, with “more developments needed to ensure there is sufficient housing supply to meet demand.”
According to Ms Yan, the Andrews government has a role to play in facilitating this sustained pipeline and supply growth through the introduction of “policies that encourage and incentivise developers to build more affordable housing.”
“They can also streamline the planning and development process to make it easier for developers to bring new housing supply to the market [as well as] explore options such as public-private partnerships to boost housing supply,” she said.
Following the collapse of prominent Victorian builder, Porter Davis last month — which ceased 1,700 home builds and impacted a further 800 contracts that had yet to commence — reforms to Victoria’s building act were floated by state Treasurer, Tim Pallas, in recent crisis talks held with four building sector lobby organisation.
As for whether Melbourne’s increasingly growing population will result in the city losing its status as one of Australia’s relatively affordable markets, with the Victorian capital’s rents the cheapest in the country while its median home value remains over $250,000 below Sydney’s, Ms Yan believes ensuring this “will require a multi-pronged approach.”
“This includes providing more affordable housing supply, incentivising developers to build more affordable housing, and addressing the root causes of the housing crisis such as inequality and housing affordability,” she said.
“The government and the private sector need to work together to ensure that there is sufficient housing supply to meet growing demand,” Ms Yan concluded.
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