Melbourne's Housing Stock - Boom or Bust

Victoria and especially Melbourne imports much yet produces little that the rest of the world chooses to buy. It hasn't always been so but as our manufacturing base moves offshore, we have increasingly relied upon the building and construction industry for our economic growth.

We have been opening up land for development, built more and more houses to settle in ever more people who migrate to Australia who also plan to live well and import much while exporting little.

Over the last year or so our Minister for Planning has been approving far too many apartment towers in the inner areas of Melbourne which is likely to result in an oversupply of small apartments that will be hard to sell or rent. So what is the outlook for our housing market ? While some commentators argue that we could be headed for a housing price crash in Melbourne, Monash University's Bob Birrell says that "those planning Melbourne's future have not come to grips with the causes of Melbourne's housing affordability crisis. The provision of even more high-rise apartment blocks or further extension of the Urban Growth Boundary will not provide a solution".

Recently the introduction of the Metropolitan Planning Strategy has suggested that we investigate putting more emphasis on regional development and unlocking the unused capacity of our middle and inner suburbs. While regionalization might be part of the solution the introduction of reformed zones for our suburbs, which is aimed to protect them from opportunistic infill, will make "unlocking" them for more housing densification impossible.

One of the drawbacks for apartments is that construction costs for larger apartments is prohibitive making them unaffordable for the family market. Most coming on line are less than 70 square metres (many are just 45 or 50 Sq. mtrs) which are mostly purchased off-the-plan by investors,with many marketed to overseas investors. It is becoming clear that we are building too many smaller apartments and the trend is towards even smaller apartments of low standard. 
(see the post below).

Labor's Melbourne 2030 plan was a failure and has been scrapped but the proposed Metropolitan Planning Strategy (MPS)which is to replace M2030 is also doomed to fail unless the Minister and his planners start thinking outside the square. 

We suggest a good start would be to reduce our immigration numbers and drastically cut back the massive visa programs (that are subject far too much manipulation) and thus reduce demand.

For more on this subject refer to the attached article from Michael Yardney which appeared in a recent Melbourne Property Buyers Agent's publication.

ABC Reports Large Scale Fraud of Australia's Visa System

Our Immigration Department is not in control of who comes in to Australia. Immigration Agents issue many visas and it has been reported that far too many of these agents issue dodgy travel and work documents which has resulted in fraud rates approaching 50 per cent to thousands of Indian students and skilled workers and 457 visa holders.

We know that this is happening in other countries too, it is not just in India.

The fraud figures obtained under Freedom of Information by the ABC Fact Check Unit show out-of-control large scale fraud.

For more on this, check out the attached report issued by ABC Radio Australia. In this report there is one alarming case of a a man entering Australia under a false identity. He had previously been deported and was eventually caught and re-deported. But what is worse, his immigration agent who was living in Australia was also under a false identity and he had helped many others to come in to Australia under false papers.

While the refugee intake is a large problem costing us many millions to manage, the unseen arrival of so many more who enter on false visa arrangements or manipulate the system is costing us much more. It has been reliably calculated that for every new arrival, Australia has to spend an additional $200,000 per new arrival for required infrastructure upgrades. 

Its time our politicians took control of who comes in to this country rather than leaving it in the hands of dodgy immigration agents.

Asian Financed Developers Build Poor Quality Apartment Towers

Our Governments currently cannot stop Asian investors building tall apartment towers in our cities says the head of the Victorian Public Service, Andrew Tongue, even though planning experts say the apartments are often of poor quality.

Marcus Spiller, a well known planner, says that many city apartments often are not very good adding that we are creating housing stock that is pretty ordinary and not very adaptable. One of the reasons is that Asian developers do not need to have their shoddy apartments pre-sold like Australian developers financed by Australian Banks do, because offshore funding is not subject to the same checks and balances that Australian Banks demand.

With around 50% of Melbourne's city apartments sold off to overseas investors ( in Sydney the percentage is nearer 80%)the whole process is handled overseas and is going to leave us with poor housing stock that will require massive maintenance in the future. 

So what will happen then when the Body Corporate fees skyrocket to cover these costs and no one wants to rent or buy these shoddy apartments.

It is time that Australia woke up to the problems associated with selling off our cities to overseas investors. And let us not forget the increasing amount of our farmland being sold off to overseas 
investors but that's another story. (See the post "Selling off the Farm" below)

Wake up Australia !

New Residential Zones Announced

The Minister for Planning announced on Friday 28th June 2013 the new zones including a Neighbourhood Residential Zone (NRZ) that will require new construction to meet neighbourhood character requirements as set by council as well as a mandatory maximum height of 8 metres.

The new NRZ will help to protect our residential areas from unacceptable,opportunistic, multi-storey development in Melbourne's suburbs

Some councils have already carried out their neighbourhood character studies and are ready to proceed in identifying where the different zones will apply in their own municipalities. It will be essential that councils get cracking so the zones will be in place before the next election because the Shadow planning Minister, Brian Tee, is not in favour and intends to push on with the very flawed Melbourne 2030 planning blueprint and no one wants that.

BRAG has lobbied hard to have our residential areas protected and we thank the Minister for Planning, Matthew Guy, for listening to us and making these changes possible.

Refer the attached media release for more information.

Reformed Residential Zones for Victoria

The Minister for Planning has introduced new planning zones which will affect all of us. The Neighbourhood Residential Zone (NRZ)will offer protection against opportunistic infill development but the commercial zones will open up opportunities for greater high and medium density development.
The new zones are:-

• Activity Centre Zone (ACZ) ( Commercial 1 & 2 zones)
• Comprehensive Development Zone (CDZ)
• Mixed Use Zone (MUZ)
• Residential Growth Zone (RGZ)
• General Residential Zone GRZ)
• Neighbourhood Residential Zone (NRZ)

For many years we have been campaigning for protection for our residential areas from inappropriate/unacceptable development and we believe that that the Minister for Planning is firmly committed to provide such protection through the residential zones, especially the Neighbourhood Residential Zone and the General Residential Zone. It is reasonable to expect that most residents will want to be in the NRZ or the GRZ because they are designed to "respect and preserve neighbourhood character". Councils are responsible to draw up neighbourhood character guidelines so just how accurate these are to the reality will be important (see item below posted on 9th June 2012). We are hoping that more weight will then be placed on neighbourhood character when appeals are heard at VCAT. To date VCAT has not really taken much notice of neighbourhood character when deciding upon residents objections.This attitude to neighborhood character by VCAT must change.

What the new NRZ & the GRZ could provide for is that, if your local area is mainly single storey with some two storey homes on garden blocks, then any new development will have to be sympathetic to that style. Councils will be responsible for identifying the zone boundaries and will be able to set height limits. Third party rights to object and appeal will apply.

We understand the Minister will personally sign off on the Councils' zoning but the interesting point is that, in the past, such planning changes have usually been handled by senior officers in the DPCD under delegation arrangements. Generally the DPCD has pushed for more hardline changes so council officers have tended to lodge applications that they think might be accepted by DPCD resulting in regulations that suit developers but not residents.

It is now up to our new councillors to complete the Neighbourhood Character Study quickly so we can gain some protection before it is too late................... STOP PRESS Refer attached media release announcing the new zones