Making The Numbers Stack Up

Making the Numbers Stack Up A Study into Major Residential Urban Renewal in Melbourne

This report has been prepared for the exclusive use of the party to whom it is addressed and for no other purpose. No responsibility is accepted for any third party who may use or rely on the whole or any part of the content of this report. It should be noted that any subsequent amendments or changes in any form to this report would only be notified to and known by the parties to whom it is addressed. This report has been carefully prepared by Charter Keck Cramer Strategic Research and the information contained herein should not be relied upon to replace professional advice on specific matters. Š 2012 (Charter Keck Cramer)

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Contents

Executive Summary Findings

4 5

1 1.1 1.2 1.3 1.4 1.5

Introduction Study Context Study Objectives Study Methodology Limitations of Alternative Data Abbreviations

6 6 6 7 8 8

2 2.1 2.2

What is Urban Renewal?

Defining Urban Renewal Major Residential Urban Renewal

9 9 10

3 3.1 3.2

Why is Urban Renewal Important?

Policy Context Imperatives for Urban Renewal

11 11 12

4 4.1 4.2 4.3

How Much Major Residential Urban Renewal Is Occurring?

Historic Urban Renewal Activity (2005–2011) Future Activity (2012–2014) Summary of Historic and Forecast Supply (2005–2014)

13 13 15 17

5 5.1 5.2 5.3 5.4

Where is Major Residential Urban Renewal Occurring?

Overall Summary Local Government Area Analysis Suburb Analysis Activities Areas Analysis

17 17 18 19 21

6 6.1 6.2

Why Is Major Residential Urban Renewal Occurring?

Supply-Side Drivers Demand-Side Drivers

23 23 28

7 7.1 7.2

Where Could Urban Renewal Occur?

Location Suitability vs Actual Supply Highest Potential Future Renewal Locations

33 33 34

8 8.1 8.2 8.3 8.4

Are Urban Renewal Objectives Being Met? Overall Summary Recent Past (2006–2011) Short Term Future (2012–2014) Municipality Analysis

38 38 38 38 39

9 9.1

Appendices Data Tables

40 40

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Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Executive Summary

Melbourne as a city has always valued urban living as a concept and as a lifestyle. Melbournians love their city, their suburbs and their communities.

There is no denying that Melbourne is growing in population and will keep growing. The Victorian Government’s latest Victoria in Future 2012 figures project that over the 40 years to 2051, Victoria’s population will increase by 3.2 million to 8.7 million. Over the same period, Melbourne’s population is expected to grow to 6.5 million, while regional Victoria is projected to grow to 2.3 million.

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The development of a new Metropolitan Strategy is on the horizon and the Victorian Coalition Government has made a clear commitment to Victoria’s growth.

Urban renewal will continue to play a significant role in how Melbourne transforms in coming years and it is important that government, industry and the community fully understands the drivers which underpin urban renewal outcomes.

The Property Council acknowledges that urban renewal encompasses more than just the residential elements. True urban renewal involves a holistic approach to a place, its infrastructure and employment links, its amenity and the way it services a community.

How we manage this growth is up to us. Housing plays a vital role in how a city manages population growth and how we provide housing is both a challenge and an opportunity for the identity of the city and the suburbs.

With this Study, the Property Council aims to demonstrate the significance of the residential element of urban renewal and argues that policy must be better informed than it currently is, by the realities of the market drivers of urban renewal.

We are entering an exciting time in Melbourne’s history.

Urban renewal is a variable which responds to market conditions rather than policy settings in isolation.

In order to develop and commit to a new Metropolitan Strategy for the future of Melbourne and Victoria, government, industry and the community must fully understand what drives urban renewal and why these factors are so important to the future identity of our city, our suburbs and our communities.

The Property Council urges the Victorian Government to take this Study, absorb it and apply the findings as it develops the new Metropolitan strategy and the policy framework which will shape Melbourne’s future identity.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Findings

• T he recent supply of new dwellings from major residential urban renewal activity across Melbourne has been significant with 39,355 new dwellings added (2005–2011) and a further 34,440 dwellings to be delivered (2012–2014).

• O ver the 2005–2014 period major residential urban renewal supply will account for around 22% of Melbourne’s additional dwelling stock.

• U rban renewal supply has not met the prevailing planning aspirations (Melbourne @ 5 Million) for 53% of new dwellings to be built in Established Areas, although it will meet this target in the 2012–2014 period.

• B eyond 2015 and into the medium term, it can be anticipated that this objective will not be met because of an expected slowdown in apartment delivery following the recent cyclical peak conditions.

• A partments have constituted the great majority (80%) of urban renewal supply and will become an increasingly important supply form within Established Areas given the scarcity of large development sites to facilitate alterative housing forms and changing property market dynamics.

• P olicy must be fully informed about the nature and dynamics affecting Melbourne’s apartment market and the development

industry’s capacity to deliver this form of housing which, effectively, must be delivered at economic cost given the high financial risks.

• I t is critical for metropolitan planning policy to establish supportive, but realistic, parameters to guide the development and spatial distribution of apartment supply into locations where requisite market preconditions already exist.

• O ver the last decade, Activity Areas based policy has failed to deliver upon housing supply objectives and is indicative of policy, in isolation, being unable to induce supply into locations where fundamentals are weak.

• T here is currently strong alignment between policy and market preferences for supply into locations offering high amenity and transport connectivity.

• M etropolitan policy should reinforce this nexus and seek to minimise constraints to new development where such preconditions exist so as to optimise supply opportunities and maximise community benefits associated with urban renewal.

changes in market conditions and density before apartments can be supported.

• N ot every centre, nor every suburb, can be expected to accommodate higher density urban renewal but those suburbs which have the necessary preconditions (transport, amenity and supportive house price structures) should be expected to provide opportunities for appropriate urban renewal to occur.

• L ocations that currently do not exhibit the necessary preconditions to support higherdensity outcomes must undergo a period of progressive step

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Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

1. Introduction

1.1 Study Context Following the election of the Liberal National Coalition in November 2010, the Victorian Government made multiple announcements with respect to urban renewal issues.

The most significant action since taking office has been the establishment of an Urban Renewal Authority (known as Places Victoria) to replace VicUrban.

The Property Council of Australia considers it important to contribute to the broad debate about urban

renewal and engage with state and local governments about ensuring the continuation of supply opportunities for new housing across established suburbs across Melbourne.

Population Plan (2010) which analysed population growth across Melbourne’s Local Government Areas (LGAs) relative to stated targets.

The Property Council seeks to provide evidence-based input into the discussion about urban renewal policy.

This Study follows the Property Council’s previous report Delivering on Melbourne’s

1.2 Study Objectives The Property Council’s objective, which now underpins this Study, is to better understand the quantum, nature and spatial distribution of major residential urban renewal activity across Melbourne. The findings from this Study are to be made available to inform the development of strategic planning policy at metropolitan and local area levels.

The Property Council is seeking to engage with the Victorian Government and its agencies and departments given that it is currently preparing Melbourne’s new Metropolitan Planning Strategy.

The new Metropolitan Planning Strategy will continue to support residential development in established suburbs, primarily

“ True urban renewal relates to the shift in the nature and characteristics of a neighbourhood.”

6

through urban renewal, as one source of new housing supply.

The Property Council aims to identify and highlight the major factors that influence the property development and investment industry to undertake urban renewal and the production of new housing supply in established suburbs.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

1.3 Study Methodology 1.3.1 Approach A rigorous process was undertaken to identify major residential urban renewal projects1 that have been completed across Melbourne since 2005. In contrast to a range of other studies and policy related research that considers urban renewal supply, this approach has, most significantly, relied upon a ground-up approach to data capture at the individual project (or stage) level.

• C harter Keck Cramer’s proprietary database of residential apartment projects across metropolitan Melbourne that contains approximately 3,000 project records;

This methodology has considered only those projects where new supply has actually been completed rather than simply considering building approval statistics (from the Australian Bureau of Statistics) at an aggregated statistical boundary level.

• U rban Development Programs (UDPs) for individual years between 2003 and 2010 that have been published by the Department of Planning and Community Development (DPCD) (and its various predecessors); and

The following data sources were primarily relied upon to identify candidate projects that were individually vetted and verified for correctness:

• C adastre of registered land parcels across all Melbourne LGAs were compared over various time frames (2003 and 2011) to identify where redevelopment

1

• C harter Keck Cramer’s proprietary database of medium-density residential projects across metropolitan Melbourne that contains over 1,100 project records;

See Section 2.1 for definition of Urban Renewal Projects for the purpose of this Study

and subdivision of single lots into multiple lots was undertaken and had not been previously identified through the above approaches.

All source data was checked with reference to historic and current aerial photography, plans of subdivision and geospatial accuracy.

Any duplicates were removed, any incorrect data was adjusted and additional projects were identified through this extensive data collection and cleansing process.

All individual project data, including stages within major renewal projects, has been created and managed within a Geographic Information System (GIS) database.

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Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

1.4 Limitations of Alternative Data no other definitive and accepted sources of data about urban renewal activity at a site-specific level available to government or the private sector.

Australian Bureau of Statistics All too often, in the absence of such data, reliance is too heavily placed upon analysis of building approvals data sourced from local government and the ABS. Whilst such data is useful for high-level consideration, there are a number of major constraints associated with reliance upon such analysis including:

Urban Development Program, Department of Planning & Community Development The UDP, an initiative commenced in the late 1990s by DPCD and its predecessors, is currently considered the best available and most comprehensive data source in relation to urban renewal. This data is well regarded by the property and planning industries but it is subject to considerable time delays in its publication and limitations in its extent and detail of coverage.

Apart from the UDP, there are

• g eographic aggregated nature of data rather than site-specific or more localised data; • t ime lags between approval and actual delivery of supply which can be up to 3 years; • l ack of project specific information; and • v ariable probabilities of approvals (especially for nonseparate dwellings) into actual completed supply.

Housing Development Data, Department of Planning & Community Development A more recent initiative of DPCD is the creation of the Housing

1.5 Abbreviations

8

Apts

Apartments

CAA

Central Activities Area

GIS Geographic Information System

CAD

Central Activity District

GFC

Global Financial Crisis

DPCD Department of Planning and Community Development

ha

Hectare

HDD

Housing Development Data

LGA

Local Government Area

Dwell(s) Dwellings

UDP Urban Development Program

Development Data (HDD) dataset series which tracks housing development, within Melbourne’s Established and Greenfield Areas, at a property parcel specific level from detailed analysis of aerial photography. Importantly, the HDD tracks the volume and nature of new housing development including: • d emolitions of existing housing stock; • r eplacement of demolished homes with single lot housing and/or multi-lot housing; and • c reation of new housing units from vacant and non-residential sites.

The full HDD data set has not been publicly released but is understood to have quantified the significant extent of new housing supply that is occurring from redevelopment of single-lot housing to multi-lot (less than 10 dwellings) housing through the domestic construction industry.

The true extent of this dispersed development activity has not been previously quantified or understood on a geospatial basis.

Given that the HDD has not been made available to the public and its last survey occurred in 2009, it was unable to be utilised as a resource for this Study.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

2. What is Urban Renewal?

2.1 Defining Urban Renewal Undertaking of this Study has highlighted a raft of issues relating to the definition of urban renewal.

This term is variously used within planning policies and by the property industry but it remains poorly defined. The planning and property industries’ understanding of the term is also often misaligned.

There are a number of terms often used interchangeably (and sometimes incorrectly) to describe urban renewal. Alternative terms include: • Established Areas redevelopment; • urban consolidation; • infill redevelopment; • medium density redevelopment; • high density redevelopment; • brownfield redevelopment; and • greyfield redevelopment.

Whilst each of these terms partly reflects some element(s) of urban renewal, none fully captures the scope of urban renewal, which is much broader than the redevelopment of a single property.

True urban renewal relates to the shift in the nature and characteristics of a neighbourhood through the cumulative effects of infrastructure investment to enhance place attributes, planning policy interventions (such as land use transition and property redevelopment(s)) that collectively support greater local economic development opportunities.

In essence, urban renewal is much more relevant to describe changes

that occur at a neighbourhood scale than in reference to site-specific redevelopment. Also urban renewal, in its true sense, is not limited to the creation of new housing supply but rather, encompasses commercial, office, retail and other forms of private property development as well as community infrastructure delivery.

Accordingly, the nature and scale of urban renewal is significant with a key defining element being that there must be a redevelopment of a site from a previous lowerorder and less intensive urban use (such as industrial usually but also potentially, commercial or institutional uses) and not simply the transformation of a formerly vacant or rural land holding within the existing city’s geographic footprint.

of suburban housing to marginally higher density housing (such as through redevelopment of single lot housing to 2–5 dwellings) is not transformative in its own right.

Given the Study objectives, the definition of major residential urban renewal has been limited to considering only the new housing supply elements rather than the full spectrum of potential non-residential uses.

Whilst incremental changes become significant through their cumulative effect, the conversion

9

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

2.2 Major Residential Urban Renewal For the purpose of this Study, the following criteria were applied to residential developments to determine if they qualified as representing major residential urban renewal activity: • L ocation: within metropolitan Melbourne Local Government Areas (LGAs).

• P revious use: Site had to be previously subject to a land use and built form that was consistent with urban development prior to redevelopment including commercial, industrial, residential or recreation (such as golf courses) uses. Any site development of previously rural or vacant land was excluded.

• P roject scale: at least 20 dwellings (delivered in one-line or within a staged project)2.

• B uilt form: consisting of either in isolation or in combination the following private dwelling types which collectively met the minimum 20 dwelling threshold: »» r esidential apartments available for unrestricted extended occupancy (excluding serviced apartments, managed student apartments, Independent Living Apartments, hostels); »» medium-density housing (including townhouses, terraces and other attached and semi-attached housing typologies); and »» detached housing.

• T iming: Completion within the 2005—2011 (calendar year) study period or forecast completion between 2012 and 2014 for projects that were actively marketed as at the end of 2011.

10

2

Refer to Section 4.1.2 for further discussion

• R esidential occupancy type: Permanent and unrestricted occupation in private dwellings available to all members of the community.

Based on the above criteria, all greenfield development (primarily Melbourne’s Growth Areas) which typically occur on previously rural land has been excluded. Other notable exclusions are as follows: • d evelopment of remnant and previously vacant sites within outer municipalities, even if surrounded by other urban uses; • r etirement villages (and other forms of managed aged accommodation); • m anaged student accommodation and hostels; • s hort-stay commercial accommodation such as serviced apartments and hotels; and • social and public housing.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

3. Why is Urban Renewal Important?

3.1 Policy Context redevelopment sites (within 400m of major public transport infrastructure) would accommodate 41% of new supply; with a further 28% being directed to dispersed sites in established urban areas (including major redevelopment sites that are not well-located to public transport). Collectively, Established Areas were planned to provide 69% of Melbourne’s future supply requirements whilst greenfield development would account for 31%.

Melbourne, like all other Australian cities, has had a longstanding strategic planning policy of supporting urban consolidation.

Although, expressed in various ways and to varying degrees, Melbourne’s planning policies have recognised the importance of the urban renewal process to deliver a significant contribution towards new housing supply.

Melbourne 2030 (2002) was premised upon Melbourne’s population growing by 1 million residents (needing 620,000 new dwellings between 2001 and 2030).

The policy called for management of this future supply so that Activity Centres (now referred to as Activities Areas) and strategic

Evolution of this policy led to Melbourne @ 5 Million (2008) which suggested the notion of Melbourne’s division into Established Areas and Growth Areas although there was no actual definition of these regions (presumably LGAs of Wyndham,

Melton, Hume, Whittlesea, Casey and Cardinia).

This policy’s aspirational target for allocation of the city’s future housing supply (600,000 new dwellings to 2026) recognised the inherent difficulties in achieving redevelopment in Established Areas by its reduction to 53% of new supply (previously 69%) with the balance of 47% in the more readily developable Growth Areas.

The main focus of supply in Established Areas was to be within and surrounding Activity Centres, along public transport routes (tram and orbital bus rotes) and around train stations as well as upon strategic redevelopment sites.

Figure 1: Policy Aspirations for Urban Renewal Location

Melbourne 2030 Actual (1997–2001)

Aspiration

Activity Centre and Redevelopment Sites

24%

41%

Dispersed Residential

38%

28%

Greenfield

38%

31%

TOTAL

Location Dwellings 254,760 Established Areas

Melbourne @ 5 Million Aspiration

Dwellings

53%

316,000

47%

284,000

171,440 193,800 Growth Areas 620,000

600,000

Sources: Department of Infrastructure (2002) Melbourne 2030: Planning for Sustainable Growth: Implementation Plan 3—Housing and Department of Planning and Community Development (2008) Melbourne 2030: A Planning Update—Melbourne @ 5 Million

“ Melbourne’s planning policies have recognised the importance of the urban renewal process to deliver a significant contribution towards new housing supply.”

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Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

3.2 Imperatives for Urban Renewal The need for urban renewal is driven by the requirement for Melbourne to continue accommodating significant future population growth that is anticipated to occur. The latest population projections from the Victorian Government, contained in Victoria in Future 2012, indicates that Melbourne’s population will grow by almost 1.3 million residents between 2011 and 2031 this implies an underlying requirement of approximately 29,000 additional dwellings per annum over the same period.

For a range of social, community, economic, environmental and financial reasons, future population growth cannot be exclusively accommodated in designated Growth Areas which necessitates that urban renewal sites will need to be continually made available to accommodate new dwelling supply.

The Established Areas, within which residential urban renewal primarily occurs, already enjoy the significant benefits of longstanding and significant investment in a range of physical, social and community infrastructure as well as high concentration of employment opportunities that supports a large existing population. The cost of replicating such infrastructure and employment opportunities in Growth Areas is immense and cost-prohibitive which is a major factor underpinning the objective to support urban renewal. Accordingly, there are significantly lesser costs to government, and in turn the community, if new housing can be supplied within Established Areas so as to maximise the utility and capacity of existing infrastructure.

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Given the prevailing urban form and structure of Melbourne, which is highly dependent upon the employment concentrations around the Central City Region and radial transportation networks, it may be broadly surmised that urban renewal offers the following benefits, amongst others, to the broader community: • R educed road congestion by minimising the distance between home and the workplace for a significant proportion of the population.

• A voided environmental costs from reduced greenhouse gas emissions (due to reduced road congestion).

• A voided environmental costs from reduced biodiversity loss resulting from greenfield development of rural land within the Growth Areas.

• I ncreased housing diversity to better match progressively shifting location and dwelling form preferences.

• C o-location of housing and employment opportunities allows services sector firms, already established and concentrated within the Central City and City Fringe Regions, to more readily access a larger number of appropriately skilled staff within a convenient travel distance.

• C o-location of housing and employment opportunities allows individual workers to maximise employment choices and to maximise their personal earnings.

Given the expected continuation of high job density within the Established Areas, and particularly within the Central City and City Fringe Regions, greater housing supply will attract more workers, both skilled and unskilled, to maximise such benefits.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

4. How Much is Major Residential Urban Renewal is Occuring?

Refer to Appendix for additional data tables relating to the quantum and nature of major residential urban renewal dwelling supply.

4.1 Historic Urban Renewal Activity (2005–2011) 4.1.1 Overall Summary There has been a significant level of new supply delivered through major residential urban renewal across Melbourne. This Study has identified 607 individual major urban renewal projects (including several multiple stage developments delivered within the study period) around Melbourne that have been completed between 2005 and 2011. These projects contain 39,355 new dwellings.

• p rovided around 16% of Melbourne’s total new dwelling supply; and

Major residential urban renewal supply in 2005–2011 can be characterised as follows: • a partments have been the predominant form (80% of total) with medium density (townhouses) and detached housing being much less significant (11% and 8% respectively);

• v ariable supply over time reflective of the influence from inherent property market and economic cycles which influence the capacity of purchasers and developers to participate.

Figure 2: Number of Projects and Dwellings Completed 2005-2011 Dwelling Type Apartments Medium Density Detached TOTAL MELBOURNE

Number of Projects (Individual Stages)

Number of Dwellings

445

31,551

159

4,494

73

3,310

677

39,355

Source: Charter Keck Cramer

4.1.2 Contribution of Major Residential Urban Renewal to Total Housing Supply

It is estimated that there has been in the order of 240,000 new dwellings completed across Melbourne between 2005 and 2011 which has resulted in an increase of approximately 210,000 in the city’s dwelling stock.

The 39,355 new urban renewal dwellings (contained in projects of 20 or more dwellings) is estimated to account for approximately 16% of Melbourne’s new dwelling supply over the 2005–2011 period.

Alternatively expressed, this urban renewal supply has provided 19% of Melbourne’s net increase in dwelling stock over this relevant period3.

housing replacement, highlights the distribution of multi-lot housing supply as follows:

From analysis of the HDD data series for metropolitan Melbourne, it is known that 54% of all new supply (between 2004–2008) occurred as single lot housing (typically within greenfield development) whilst projects of 20 or more dwellings equated to 23% of overall supply.

Assuming this distribution of new supply is constant over the study period, it can be estimated that multi-lot housing within the Established LGAs equated to around 80,000 dwellings in the 2005–2011 period.

• 3 3% (of dwellings) in projects yielding 2–4 dwellings; • 1 8% in projects yielding 5–19 dwellings; and • 4 9% in projects yielding 20 or more dwellings.

Interestingly, analysis of the HDD data series for Established LGAs to exclude single lot housing and

Estimated from Spatial Economics (2010) Housing Development Data: 2004 to 2008 - Statistical Summary Report, p.21 and Building Commission –Pulse Data

3

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Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

4.1.3 Annual Delivery There has been significant variation in the quantum of urban renewal dwellings delivered across Melbourne with an average annual supply of 5,620 dwellings per annum within a range of approximately 3,000 to 9,000 dwellings in any single year.

Below average completions in the late 2000s was primarily caused by weakness in off-the-plan apartment sales in 2004–2006 (following a cyclical peak) whereas higher than average completions in 2010–2011 resulted from an improvement in off-the-plan apartment sales in the latter part of the 2000s.

Figure 3: Dwellings Completed Detached Medium Density Apartments 10000 8000 6000 4000 2000 0 2005

2006

2007

2008

2009

2010

2011

Source: Charter Keck Cramer

4.1.4 Project Size The majority of major residential urban renewal projects related to those containing 20–49 dwellings (55% of projects) with the largest projects of 200+ dwellings accounted for only 9% of all projects.

Significantly, the largest projects (200+ dwellings) accounted for 38% of overall dwelling supply whereas each of the other project size categories accounted for approximately 20% each.

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Figure 4: Completions by Project Type Project Size

Number of Projects

Dwellings

20–49 Dwellings

265

8,363

50–99 Dwellings

120

8,448

100–199 Dwellings

52

7,581

200+ Dwellings

43

14,963

480

39,355

TOTAL MELBOURNE Source: Charter Keck Cramer

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

4.1.5 Building Heights Urban renewal dwellings in detached and medium density forms are generally a combination of single and double storey buildings however there is wide variation in the height of apartment buildings which account for the great majority of overall urban renewal dwelling supply.

“ Major residential urban renewal is a significant source of housing supply in Melbourne, particularly as it represents the redevelopment and reuse of currently underutilised sites.”

Apart from detached and medium density dwellings in 1–3 levels, which accounted for the largest number of urban renewal dwellings (20% of dwellings), most of Melbourne’s apartment supply has been delivered within apartment buildings of 2–3

and 4–6 levels which collectively accounted for 36% of competed urban renewal dwellings.

The primary apartment market in the Established—Inner LGAs had its supply concentrated in 4–6 level

buildings (21% of its overall supply) and 20+ levels (43%).

In the Established—Middle LGAs, only 13% of its urban renewal supply was delivered in buildings of more than 6 levels.

Figure 5: Completions by Building Height and Location—Number of Major Residential Urban Renewal Dwellings LGA Location

Number of Dwellings (Levels) 1-3 levels (non-apts)

Apts (2–3)

Apts (4–6)

Apts (7–9)

Apts (10–14)

Established—Inner

898

889

4,605

1,877

2,734

1,758

3,673

5,740

Established—Middle

5,015

3,011

4,809

1,300

543

64

0

0

467

100

60

0

0

0

0

0

Established—Outer Growth Area TOTAL MELBOURNE

Apts Apts (15–19) (20–29)

Apts (30+)

1,424

206

182

0

0

0

0

0

7,804

4,206

9,656

3,177

3,277

1,822

3,673

5,740

Source: Charter Keck Cramer

4.2 Future Activity (2012–2014) There were 421 major residential urban renewal projects (including several multiple stage developments) that were either under construction or being actively marketed as at the end of 2011, which are anticipated

to be completed between 2012 and 2014. These projects are anticipated to deliver 34,440 new dwellings within the forecast period with prevailing activity representing a cyclical peak of construction.

Figure 6: Number of Major Residential Urban Renewal Projects and Dwellings—Forecast Completion 2012-2014 Dwelling Type

Number of Projects (Individual Stages)

Number of Dwellings

Apartments

311

28,150

Medium Density

96

2,982

Detached TOTAL MELBOURNE

46

3,305

453

34,437

Source: Charter Keck Cramer 15

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

It is significant that there will be a dramatic increase in the level of new urban renewal supply over the forecast period with a peak of 14,960 dwellings in 2013. The annual average supply will be 11,480 dwellings per annum. which is just over double the average supply between 2005—2011. Also, over the

forthcoming 2012—2014 period, major residential urban renewal will account for 38% of Melbourne’s total new housing supply (and 44% of net supply additions) which is a much higher representation that occurred in the preceding 2005—2011 period of 16%.

Whilst the increase in apartments supply will be most pronounced, the number of detached and medium density dwellings is also expected to be higher in the future than in the recent past.

Figure 7: Annual Dwellings—Historic and Forecast Completions 2005–2014 Detached Medium Density Apartments 16,000 Dwelling Completions

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2005

2006

2007

2008

2009

2010

2011

2012f

2013f

2014f

Source: Charter Keck Cramer

Relative to recent supply (2005– 2011), the forthcoming supply in the 2012–2014 period is differentiated by the following factors: • I ncreased contribution to overall urban renewal supply from apartments (in absolute and relative terms) from an already high level (from 80% to 82%).

• H igher concentration of supply in larger projects of more than 100 dwellings.

• H igher concentration of supply from taller buildings with 42% of overall supply from apartment buildings of more than 10 levels (31% in 2005–2011) with a marked concentration within the Established—Inner LGAs as

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well as an increased provision of such buildings (10–14 levels) outside core apartment markets in emerging locations within the Established—Middle LGAs. Whilst the forecast period does not extend beyond 2014 in this Study, it is can be confidently anticipated that residential urban renewal supply will slow considerably post 2014 given the heavy influence of apartments within the urban renewal concept. The evident slowing in the established housing market since 2010 and the more pronounced reduction in off-the-plan apartment sales activity at the same time will translate through to lower future completion levels.

However, in the medium term, beyond 2014, there will be an increased provision of medium density projects, particularly across the Established—Middle region, as well as continuing supply of smaller apartment projects. The continuing activity within these development forms however will not be sufficient to offset the expected reduction in future apartment completions.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

4.3 Summary of Historic and Forecast Supply (2005–2014) Over the 10 year period 2005–2014 (inclusive), it is anticipated that there will be a total of 73,800 dwellings delivered across Melbourne through major residential urban renewal projects of 20 or more dwellings.

This new supply will equate to around 22% of Melbourne’s total dwelling supply across this overall period and 25% of the net increase in dwelling stock.

Major residential urban renewal is a significant source of housing supply in Melbourne particularly given that it represents the redevelopment and reuse of currently underutilised sites within the Established LGAs which is consistent with the longstanding planning policy objective of urban renewal and consolidation.

Interestingly, 53% of the overall 2005–2014 supply that will occur has already occurred over the past seven years whereas the remaining 47% is to be delivered in a much shorter three year period between 2012 and 2015.

5. Where is Major Residential Urban Renewal Occuring?

5.1 Overall Summary The spatial distribution of major residential urban renewal supply in 2005–2011 can be characterised as follows: • H ighly concentrated in the Established—Inner LGAs with the City of Melbourne alone accounting for 35% of total supply.

• M edium density supply has been broadly dispersed across Melbourne although most prevalent in the Established— Middle LGAs.

• T he highest concentration is found in the suburb of Melbourne (CBD and St Kilda Road) and adjoining suburbs of Southbank and Docklands because of the suitability of these locations for apartment development.

• D etached housing has been primarily confined to the Established—Middle and Established—Outer and Growth Area LGAs where large redevelopment sites are more readily available.

• T here has been no evidence of supply being attracted to designated Activities Areas notwithstanding the strong urban renewal framework placed around a number of the Central Activities Areas over the past decade.

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Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

5.2 Local Government Area Analysis The Established—Inner LGAs, as expected, have accommodated the majority (56%) of Melbourne’s major residential urban renewal supply with the Established—Middle LGAs also shouldering a significant proportion (37%) of supply. The highest urban renewal supply has occurred in the Inner LGAs of Melbourne, Port Phillip, Stonnington, Yarra followed by Moreland (classified as a Middle LGA).

Interestingly, only 11 of the 31 LGAs have experienced major residential urban renewal supply of more than 1,000 dwellings with another 13 LGAs

having experienced less than 500 new urban renewal dwellings.

originating from major residential urban renewal.

In relation to major residential urban renewal supply in the form of apartments, the Established—Inner LGAs have accounted for 67% of Melbourne’s apartment supply with a further 31% delivered in the Established—Middle LGAs.

Over the 2012—2014 forecast period the prevailing pattern of supply will continue to be observed across Melbourne although the City of Melbourne will account for a lesser concentration (29%) of overall activity than it has over the recent past. Stonnington and Yarra will account for the greatest increases in relative supply between the recent past and forthcoming periods wherein their shares of overall metropolitan activity will each increase by 3% points to 9% each.

The Established—Middle LGAs have accommodated for the majority (70%) of Melbourne’s medium density housing (primarily townhouses in Maribyrnong, Kingston and Monash) supply

Figure 8: LGA and Dwelling Types

18

LGA Name

LGA Type

Apartments

Medium Density

Detached

TOTAL

LGA Rank (TOTAL)

Banyule

Established—Middle

267

27

-

294

19

Bayside

Established—Middle

451

63

-

514

17

Boroondara

Established—Middle

1,569

-

130

1,699

7

Brimbank

Established—Outer

-

100

128

228

22

Cardinia

Growth Area

-

-

-

0

n/a

Casey

Growth Area

-

-

-

0

n/a

821

252

571

1,644

8

-

-

-

0

n/a

655

15

Darebin

Established—Middle

Frankston

Established—Outer

Glen Eira

Established—Middle

556

76

23

Greater Dandenong

Established—Middle

146

407

240

793

13

Hobsons Bay

Established—Middle

143

114

-

257

21

Hume

Growth Area

-

31

-

31

25

Kingston

Established—Middle

357

502

17

876

12

Knox

Established—Middle

20

71

60

151

23

Manningham

Established—Middle

239

91

53

383

18

Maribyrnong

Established—Middle

1,316

532

189

2,037

6

Maroondah

Established—Outer

142

18

113

273

20

Melbourne

Established—Inner

13,468

386

25

13,879

1

Melton

Growth Area

-

-

-

0

n/a

Monash

Established—Middle

636

456

434

1,526

9

Moonee Valley

Established—Middle

895

88

39

1,022

11

Moreland

Established—Middle

1,800

374

59

2,233

5

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

LGA Name

LGA Type

Apartments

Medium Density

Detached

TOTAL

LGA Rank (TOTAL)

Mornington Peninsula

Established—Outer

18

75

33

126

24

Nillumbik

Established—Outer

-

-

-

0

n/a

Port Phillip

Established—Inner

3,484

198

-

3,682

2

Stonnington

Established—Inner

2,325

26

-

2,351

3

Whitehorse

Established—Middle

511

78

69

658

14

Whittlesea

Growth Area

388

191

647

1,226

10

Wyndham

Growth Area

-

75

480

555

16

Yarra

Established—Inner

1,999

263

-

2,262

4

Yarra Ranges

Established—Outer

-

-

-

0

n/a

TOTAL MELBOURNE

31,551

4,494

3,310

39,355

Established—Inner

21,276

873

25

22,174

Established—Middle

9,727

3,131

1,884

14,742

Established—Outer

160

193

274

627

Growth Area

388

297

1,127

1,812

Source: Charter Keck Cramer

5.3 Suburb Analysis The highest supply of major residential urban renewal has been concentrated in the suburbs of Melbourne (including parts of the St Kilda Road precinct), Southbank and Docklands as well as in other suburbs contained in the Established—Inner LGAs where apartment supply has predominated.

“ Over the 2012—2014 forecast period the prevailing pattern of supply will continue to be observed across Melbourne.”

19

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 9: Top 20 Suburbs by Dwelling Types (2005–2011) Metro Rank

Apartments (Suburb/No dwells)

Medium Density (Suburb/No dwells)

Detached (Suburb/No dwells)

TOTAL (Suburb/No dwells)

1st

Melbourne (6651 apts)

Mulgrave (322)

Williams Landing (480)

Melbourne (6651)

2nd

Southbank (2718 apts)

Bundoora (222)

Lalor (478)

Southbank (2718)

3rd

Docklands (1956 apts)

Parkville (172)

Macleod (442)

Docklands (2026)

4th

South Yarra (1352 apts)

Maribyrnong (169)

Mulgrave (400)

South Yarra (1352)

5th

Port Melbourne (1070 apts)

Maidstone (164)

Bundoora (298)

Port Melbourne (1183)

6th

Richmond (996 apts)

Bonbeach (160)

Dandenong (240)

Richmond (1125)

7th

North Melbourne (883 apts)

Brunswick East (159)

Kew (130)

Bundoora (1011)

8th

St Kilda (869 apts)

Dandenong (158)

Croydon (113)

North Melbourne (992)

9th

Brunswick (781 apts)

Coburg (143)

Maribyrnong (95)

St Kilda (869)

10th

Hawthorn (735 apts)

Springvale (134)

Sunshine West (78)

Brunswick (833)

11th

Prahran (705 apts)

Richmond (129)

Maidstone (70)

Coburg (768)

12th

East Melbourne (640 apts)

Clayton South (125)

Forest Hill (69)

Hawthorn (735)

13th

Footscray (616 apts)

Port Melbourne (113)

Ferntree Gully (60)

Mulgrave (722)

14th

Coburg (566 apts)

North Melbourne (109)

Coburg (59)

Prahran (705)

15th

Carlton (562 apts)

Newport (87)

Doncaster East (53)

Macleod (703)

16th

Bundoora (491 apts)

West Footscray (86)

Sunshine North (50)

Footscray (661)

17th

Preston (440 apts)

Mentone (83)

Chadstone (34)

East Melbourne (640)

18th

West Melbourne (429 apts)

Yarraville (82)

Mornington (27)

Carlton (562)

19th

Collingwood (428 apts)

Burwood (81)

Parkville (25)

Maribyrnong (553)

20th

Glen Iris (404 apts)

Heatherton (80)

Footscray (24)

Williams Landing (513)

Source: Charter Keck Cramer

The Established—Middle LGA suburbs that have performed strongly and are within the Top 20 suburbs include Bundoora (ranked 7th), Brunswick, Coburg, Mulgrave, Macleod, Footscray, Maribyrnong and Williams Landing. These suburbs are characterised by the availability of large redevelopment site which were, in most instances previously industrial and manufacturing hubs in the Melbourne economy.

20

Interestingly, major residential urban renewal in Bundoora, Macleod, Maribyrnong and Williams Landing has all occurred because of the divestment of longstanding government owned sites that were primarily previously used for institutional and/or industrial purposes.

The only suburb to rank in the top 20 suburbs across all categories of housing form was Coburg which ranked 11th for overall supply.

Over the 2012–2014 forecast period, new entrants to the list of Top 20 suburbs for overall supply will be Abbotsford (ranked 5th), South Melbourne (ranked 6th), Lalor (due to high detached housing provision), Doncaster, Northcote and Croydon (primarily detached).

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 10: Total Dwellings by Suburbs (2005–2011)

Source: Charter Keck Cramer

5.4 Activities Area Analysis One of the key elements of Melbourne’s strategic planning policy has been the elevated importance of Activities Areas (previously termed as Activity Centres and Activity Districts) as a destination for urban renewal, in the context of its broader definition. Despite the emphasis upon these nodes, there has been minimal new housing investment within them (excluding the Melbourne CAA/CAD) as they have only attracted 14% of overall urban renewal housing supply.

Rather, this supply has been predominantly attracted to a small number of Principal and Major, rather than Central, Activities Areas.

Prahran/South Yarra are the only Activities Areas to have experienced new supply of any real significance (being more than 1,000 dwellings).

It is contended that it was this Activities Area’s location and surrounding housing market fundamentals rather than its designation as an Activities Area which underpinned its ability to attract redevelopment. Only two other Activities Areas Footscray and Fitzroy—Smith Street, attracted more than 500 new dwellings.

Apart from the Prahran/South Yarra Activities Area, all other designated Activities Areas have failed to attract

more than 50% of the urban renewal supply that has occurred within the municipality in which it resides. In the majority of cases, less than 20% of the municipality’s urban renewal supply has been attracted to the Activities Areas.

Perhaps this finding is indicative of a restricted availability of suitable development site opportunities within Activities Areas, but it is more likely that the prevailing characteristics of the surrounding housing markets are not able to support apartment projects.

“ Despite the emphasis on Activities Areas, there has been minimal new housing investment within them.”

21

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 11: Urban Renewal: Total Dwellings by Activities Areas Activities Area Type

LGA Type

Apartments

Medium Density

Detached

TOTAL

% Urban Renewal Dwellings in LGA

227

0

0

227

34%

Central Box Hill

Established—Middle

Broadmeadows

Growth Area

0

0

0

0

0%

Dandenong

Established—Middle

83

158

100

341

43%

Footscray

Established—Middle

572

0

0

572

28%

Frankston

Established—Outer

0

0

0

0

0%

Ringwood

Established—Outer

50

8

0

58

21%

932

166

100

1,198

Subtotal Central Activities Area Principal Coburg

Established—Middle

247

36

0

283

13%

Doncaster Hill

Established—Middle

84

0

0

84

22%

Moonee Ponds

Established—Middle

Prahran/South Yarra

Established—Inner

Preston—High Street

Established—Middle

Sydenham

Established—Outer

Subtotal Principal Activities Area

64

0

0

64

6%

1,605

0

0

1,605

68%

434

0

0

434

26% 27%

0

61

0

61

2,434

97

0

2,531

Major Altona

Established—Middle

31

0

0

31

12%

Ascot Vale—Union Street

Established—Middle

32

0

0

32

3%

Bentleigh

Established—Middle

36

0

0

36

5%

Boronia

Established—Middle

20

0

0

20

13%

Brunswick

Established—Middle

34

0

0

34

2%

Carnegie

Established—Middle

73

0

0

73

11%

Fitzroy—Brunswick Street

Established—Inner

35

0

0

35

2%

Fitzroy—Smith Street

Established—Inner

533

11

0

544

24%

Hampton

Established—Middle

21

0

0

21

4%

Heidelberg

Established—Middle

44

0

0

44

15%

Ivanhoe

Established—Middle

38

0

0

38

13%

Kew Junction

Established—Middle

44

0

0

44

3%

Malvern/Armadale

Established—Inner

39

0

0

39

2%

Mordialloc

Established—Middle

38

0

0

38

4%

Oakleigh

Established—Middle

41

28

0

69

5%

Richmond—Bridge Road

Established—Inner

359

17

0

376

17%

Richmond—Victoria Street

Established—Inner

92

41

0

133

6%

Sandringham

Established—Middle

113

0

0

113

22%

Springvale

Established—Middle

24

0

0

24

3%

Subtotal Major Activities Area

1,647

97

0

1,744

TOTAL ACTIVITIES AREAS

5,013

360

100

5,473

Source: Charter Keck Cramer

22

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

6. W hy is Major Residential Urban Renewal Occuring?

6.1 Supply-Side Drivers Notwithstanding the importance of demand side factors, the property development and investment industry is only able to feasibly (and sustainably from an economic perspective) provide new housing supply through urban renewal when there is alignment between a number of criteria. The main drivers and indicators of such opportunity include the combination of:

• development site availability; • planning framework and certainty; • d evelopment finance availability; and

limitations upon supply of medium density and detached dwelling projects as described in the following section.

• risk and returns.

For the purpose of this Study, focus will be upon the delivery of apartments given that it has represented 80% of urban renewal supply since 2005 and for the

6.1.1 Development Site Availability Apartment Projects Apartment projects of 20 or more dwellings (over three levels) can occur on development sites as small as 400m2 across Melbourne’s suburbs. However larger schemes typically occur on sites of 800– 2,000m2 with site dimensions impacted by car parking provision

requirements and height limitations.

The Melbourne CBD is able to accommodate the most dense supply outcomes with site area being a less important consideration for new apartment supply.

Apartment projects of varying scales can occur on a wide range of sites which implies from a policy perspective, that there is a much greater availability of potential development sites to accommodate major urban renewal housing supply through this format.

established suburbs compared to 4,000+m2 sites which is reflected by the broad distribution of projects of two to five townhouses across Melbourne at an affordable cost and where feasibility parameters are attractive enough to encourage such supply.

policy cannot rely on this housing format to deliver a major and consistent quantum of future supply uniformly across Melbourne. An inherent policy objective should therefore be to encourage greater supply through a higher number of smaller medium density projects, of up to 5 or so dwellings per project, so as to better align consumers’ preferences to the industry capacity of small builders and developers.

Medium Density Projects The opportunity to deliver major residential urban renewal through medium density housing projects of any scale is mostly driven by the availability of vacant sites with appropriate zoning that are large enough to accommodate this form of development.

For a typical townhouse scheme of 20 townhouses, a development site would have to contain a minimum land area of around 4,000m2.

Across Melbourne, at any point in time, there are only a relatively small number of development sites of more than 4,000m2 available to accommodate medium density projects.

This form of new housing supply is much better suited to delivery via smaller projects by domestic builders and small private developers. There is a much broader availability of small development sites (of 400–1,000m2) across Melbourne’s

Given the restricted and variable supply of development sites of the appropriate scale to accommodate major medium density projects,

23

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Detached Dwelling Projects The minimum development site area for a detached housing development of 20 dwellings is in the order of 10,000m2 (1 ha). The limited availability of such sites is reflected in the observation that there have only been nine projects containing between 20 and 100 dwellings delivered across Melbourne between 2005 and 2011.

Clearly, the great majority of detached housing supply from urban renewal opportunities has emanated from a small number of much larger projects containing more than 100 dwellings where development sites have become available through

relocation (and rezoning) of previous industrial, government-related institutional or recreation uses (such as golf courses) that were initially established at the then prevailing urban fringes and when land values at those locations were very low.

Accordingly, it is largely for this reason that the production of major urban renewal housing supply through this housing format has been limited and generally related to much larger projects containing more than 100 dwellings (78% of 2005–2011 detached dwelling supply).

From a policy perspective, it is necessary to recognise that there are only a scarce (and reducing) number of sites of sufficient scale to continue supporting detached housing redevelopments in Established Areas. The availability of such development sites will, in the future, be increasingly dependent upon the rezoning of redundant industrial precincts (and sites) although such opportunities are anticipated to be in the Established—Inner and Middle regions wherein market dynamics are more likely to lead to a supply response that is more reflective of a medium density outcome.

6.1.2 Planning Framework The planning framework is established by the prevailing local planning policy context and statutory controls (zones and overlays). Across Melbourne, it is calculated that 83% of suitably zoned land for residential development is unconstrained by restrictive planning overlays (such as Heritage, Neighbourhood Character and selected Design and Development Overlays).

24

must be made available to satisfy existing levels of underlying housing requirements.

The lowest level of unconstrained statutory planning controls are in the Established—Inner LGAs whereby 55% of suitably zoned land is unconstrained. This region of Melbourne has experienced, by far, the highest level of urban renewal housing supply and remains highly attractive from a market perspective to accommodate future supply.

Apart from the strategic policy and statutory controls, an equally important aspect of the planning framework is the attitude of local communities towards redevelopment of sites within Established Areas.

This attitude, which cannot be universally quantified, may lead to opposition to redevelopment schemes which becomes a barrier to the supply of housing through the urban renewal process.

This attitude typically becomes manifested in the planning application process which adds cost and time at the front end of the development process when a project is most sensitive to cost pressures.

Accordingly, it is evidenced that major residential urban renewal supply is being delivered from sites that are subject to restrictive planning controls meaning the resultant development is usually limited in its scale and form. This limitation upon development implies that alternative and additional sites

Higher costs and longer timeframes to gain planning approval may ultimately render a project to unfeasible (due in part to higher holding costs) or cause a project to miss an opportune time within the market cycle to respond to supportive demand conditions which allows the supply to be facilitated.

The development industry requires certainty around planning outcomes and processes so that it can apply appropriate allowances at the acquisition stage to the price it must pay for a site to secure a future opportunity. All too often, planning risk is underestimated and causes project scale and intensity to be further increased to offset the greater costs resulting from planning related delays and to restore feasibility parameters to a project.

“ Across Melbourne, it is calculated that 83% of suitably zoned land for residential development is unconstrained by restrictive planning overlays.”

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 12: Summary of Suitably Zoned Land for Residential Development LGA Name

Suitably Zoned Land for Residential Development (ha)

Unconstrained Residential Land (ha)

% Unconstrained Suitably Zoned Land

Banyule

3,639

2,701

74%

Bayside

2,555

25

1%

Boroondara

4,277

3,517

82%

Brimbank

5,254

5,202

99%

Cardinia

1,893

1,887

100%

Casey

7,787

7,755

100%

Darebin

6,127

2,999

49%

Frankston

4,673

3,699

79%

Glen Eira

3,184

2,964

93%

Greater Dandenong

3,993

3,980

100%

Hobsons Bay

2,170

1,720

79%

Hume

6,456

6,365

99%

Kingston

4,044

3,375

83%

Knox

4,814

3,813

79%

Manningham

3,564

3,214

90%

Maribyrnong

1,677

1,445

86%

Maroondah

4,511

3,755

83%

Melbourne

974

564

58%

Melton

3,063

2,368

77%

Monash

5,311

5,149

97%

3,027

2,803

93%

Moreland

3,377

2,999

89%

Mornington Peninsula

5,529

1,405

25%

Moonee Valley

Nillumbik

1,410

1,376

98%

Port Phillip

1,169

480

41%

Stonnington

2,146

1,552

72%

Whitehorse

5,119

5,017

98%

Whittlesea

5,154

5,131

100%

Wyndham

7,453

7,418

100%

967

310

32%

Yarra Yarra Ranges TOTAL MELBOURNE Established—Inner

2,484

2,458

99%

117,799

97,446

83%

5,255

2,906

55%

Established—Middle

56,878

45,720

80%

Established—Outer

23,860

17,896

75%

Growth Area

31,806

30,924

97%

Source: Charter Keck Cramer

25

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

6.1.3 Finance Availability The reality of property development is that it is a high cost and high risk business activity that requires a commensurately higher financial return. Accordingly, from a developer’s financial perspective it is most efficient if development is funded through debt so as to allow returns to be leveraged and to achieve the required targets which would not otherwise be achievable through cash (equity) funding.

Nearly all new development projects are undertaken through a combination of debt (provided by financiers) and equity (from developers) to fund site purchase, construction and other development costs. The ratio between debt and equity will vary according to the financiers’ assessment of their

26

potential project-related risks which will be influenced by a broad range of internal and external factors such as the financial capacity of the borrower (developer), project fundamentals (location, design, etc), levels of off-the-plan sales commitment and financial position of appointed builder.

The onset of the Global Financial Crisis in 2008 has had a marked effect upon the property development industry and its ability to provide housing supply to meet underlying demand requirements at an affordable price level. The post-GFC funding environment for new urban renewal projects can be characterised as follows:

• S ignificantly tighter controls over financiers’ lending practices by regulatory authorities which has dictate that less funding be made available to property development which is considered to represent a higher risk activity.

• C redit rationing by financiers by application of more rigorous assessment criteria of all participants to a development (developer, builder) and the project’s underlying location and market fundamentals.

• S ignificantly increased finance costs and charges including higher interest rates to reflect greater risk premiums.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

• S ignificant reduction in the number of potential sources of finance given the withdrawal of overseas banks, mezzanine providers and smaller/regional banks.

The project finance industry is a critical component within the context of urban renewal housing supply that is often poorly understood by planning policy. Without funding availability, even the best designed

project with reference to planning policy and design guidelines that meets a raft of objectives, will simply not be deliverable.

This issue is particularly pertinent to major residential urban renewal projects in emerging locations where financiers are still risk adverse to unproven markets. Location risk differentially affects the potential for projects to be supported across Melbourne and implies that projects

within well established locations are more readily supportable. An assessed higher risk premium because of a project’s location implies that finance costs for a developer will be higher which causes a project’s feasibility to be further impaired and ultimately diminishes the capacity to deliver more affordable supply in emerging locations.

6.1.4 Risks and Returns Apart from the prevailing and expected property market conditions there are a broad range of other factors that influence developers’ decisions to pursue the delivery of apartments or other forms of housing supply. In order to induce supply from developers, there must be suitable pool of prospective purchasers within a market available to facilitate the achievement of an appropriate financial return consistent with the need to cover project related costs (site purchase, construction, holding charges, finance charge, taxes, business administration) and an appropriate profit margin to compensate for inherent risks of a project.

The types of property development risks are significant and may be summarised as: • E xternal Risks (beyond the control of an individual developer): »» M arket: broader property market environment, cyclicality. »» E conomic/Financial macroeconomic settings, economic growth, inflation, interest rates, finance availability. »» P olicy/Regulatory: change of government, change in policies and programs, regulatory environment, fees and charges, deliverability of policy vision.

»» C ompetition: actions by competitors to offer alternative product. »» P lace/Location: perceptions (justified or otherwise) about a place, changes in amenity of location, actions by adjoining properties. »» C onsumer: community expectations, shifting preferences.

• I nternal Risks (within the control of an individual developer): »» S ite: availability, acquiring an appropriate site. »» P lanning: time delays and expense of pursuing a permit, objections.

If the price, based upon the economic cost of delivery, is too high relative to purchasers’ willingness and capacity to pay, the supply will simply not be delivered as a developer would otherwise suffer a financial loss.

Apartments as a mainstream housing form will not proliferate in suburbs where the economic costs of delivery are not supported by the relative house pricing structure and feasibility metrics. While small-scale builders and developers may emerge in immature locations, this is unlikely in a significant volume that would attract further corporate investment.

»» M arketing: selection of target markets, pricing strategy. »» C apital: potential loss of initial capital through diminution of property value due to project failure. »» C onstruction: unbudgeted cost and time over-runs.

The levels of financial return being sought be developers, and financiers, must be benchmarked against potential investment in alternative investment opportunities.

Accordingly, new supply will only be offered to purchasers at a price that justifies developers’ investments.

27

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

6.2 Demand-Side Drivers Demand for housing through the urban renewal process will predominantly be satisfied by the delivery of apartments.

It is summarised that the key demand side drivers are:

• location suitability; and • l ocal housing market fundamentals.

6.2.1 Purchaser vs. Occupier Demand Differences accommodation) because of the financial reality of housing costs.

Residents are now more willing, and have broader choices, to trade-off between a lower ranked housing option (say apartments) and a more preferred location.

There is almost an inherent assumption in planning policy that housing demand is only expressed by owner-occupiers with no distinction allowed for the often different requirements of purchaser demand and occupier demand. For example, planning policy assumes that population growth will drive underlying household formation and that all households have the financial capacity to induce a housing supply response so that underlying demand will be satisfied.

28

It has been evidenced however that this assumed relationship is highly complex and increasingly distorted by a range of factors.

Taxation policies, planning policies, finance availability and development industry capacity are amongst a multitude of influences that affect both demand and supply. The higher costs of production for housing supply implies that purchasing a home has pushed beyond the financial capacity of an increasing number of households whose underlying housing requirements

must therefore be satisfied through renting rather than owning a home.

In relation to urban renewal policies, where it is observed that apartments are the overwhelming form of supply, it is particularly critical that the distinction between purchaser and occupier demand is better understood. Purchaser demand for apartments is largely driven by investors and occupancy demand is driven by renters. The needs of these groups are therefore quite different which has potential policy implications.

From the occupancy demand perspective, there is an emerging body of research in Australia to suggest that residents (as purchasers or renters) are making trade-offs in their housing choices between the form of accommodation and its location. A higher proportion of the population are now having to make a trade-off between where they want to live (relative to amenity and convenience) and how they want to live (relative to nature of

From the purchaser demand perspective, financial considerations underpinning investment fundamentals are most important.

These investment fundamentals relate to both income generation as well as capital gain prospects through the life of the investment.

Accordingly, investors seek to optimise financial returns by minimising initial and ongoing costs, maximising rental income and maximising the potential for capital growth.

An example of differing objectives of investors (purchasers) and renters (occupiers) which has become manifested in the apartment market in the last decade is demonstrated by the increased supply of both smaller as well as more one bedroom apartments. The logic underpinning this outcome is described as follows: 1. D evelopers respond to purchaser demand through the sale of apartments because income returns associated with subsequently holding the apartments upon completion would otherwise be insufficient to achieve the required financial return.

2. O verwhelming purchaser demand has been expressed by investors who have the financial capacity

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

to participate in the apartment market (because of taxation and other incentives).

3. I nvestor preference is for a housing product at an affordable price point.

4. Developers must ensure their projects are saleable in order to secure a high level of off-theplan sales.

5. A very high level of off-the-plan sales is required to provide security to financiers which

underpins their support for construction finance.

6. The lowest cost products that a developer can deliver are one bedroom apartments.

7. R ising productions costs and purchaser sensitivity to price causes developers to reduce the size of apartments to meet the price ceiling imposed by prospective purchasers.

Through this process, the needs of the ultimate occupiers (i.e. renters) are not the primary consideration for developers, purchasers or financiers. A similar logic dictates that any planning policy that supports affordable, large family sized apartments will be ultimately undermined by the reality of the current project financing environment which rewards a ‘more of the same’ approach and stifles innovation in product design or product mix.

6.2.2 Location Suitability Apartment supply is not evenly distributed across Melbourne with only 105 of Melbourne’s approximately 310 residential suburbs having accommodated an apartment project of more than 20 dwellings. The supply that has occurred is very highly concentrated with 35% of recent supply having occurred in just the top three suburbs (Melbourne, Docklands, Southbank).

The relationship between location characteristics and apartment supply is intuitively considered to be strong.

Location characteristics being sought by purchasers and occupiers are aligned because ultimately the investment return for an owner is going to be directly related to the ability to attract rental demand.

Renters historically attracted to apartments have been characterised by younger age cohorts not yet financially capable of entering home ownership.

For a range of reasons, the primary location characteristics being sought by renters are summarised as follows: • h igher levels of amenity (indicated by a mix of retailing, street based activity, entertainment and recreation facilities, and a sense of place amongst other factors); • p roximity and accessibility to employment nodes; and

• p roximity to transport infrastructure particularly public transport (preferably rail and trams).

Investor purchasers of apartments logically follow renter demand.

Importantly, they also seek certainty of capital value with potential for capital growth. As such, investors prefer to invest in lower value property within higher value housing submarkets where the established housing stock is priced at a premium to new apartments so as to lessen potential competition upon resale.

Accordingly, the location suitability requirements of renters and purchasers are generally aligned.

Given the historic development pattern of Melbourne which has been highly CBD centric and facilitated a radial transport system, it logically

follows that the Established – Inner LGAs have the highest concentration of Melbourne’s retailing, employment and entertainment opportunities as well as the greatest transport connectivity (especially public transport infrastructure). This region also generally contains the highest value housing in Melbourne.

There is a strong correlation between house values, amenity levels, employment accessibility and transport infrastructure.

The location suitability, for apartments, according to these criteria has been assessed across Melbourne’s suburbs which confirms that the most suitable locations are concentrated in the Established— Inner LGAs with a bias to the east and bayside regions.

29

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 13: Apartment Location Suitability Analysis—Melbourne Metropolitan Region

Source: Charter Keck Cramer

6.2.3 Local Housing Market Fundamentals It is contended that the primary indicator of a local housing market’s readiness to accept the development industry’s offer of alternative housing supply, in the form of apartments, is the prevailing house price structure in that locality.

Effectively, house prices (at a suburb level) can be considered to represent proxies for a suburbs relative attractiveness to live in and represents a capitalisation of the suburb’s various attributes.

There is a clearly established hierarchy of housing forms and prices across Melbourne. The emergence of critical masses of apartments within a suburb of say 500 contemporary apartments demonstrates that the housing market within that location has reached a point of maturity that facilitates a clear segmentation between the established housing, 30

townhouse and apartment sectors.

For a viable and legitimate apartment market to emerge within a suburb, the suburb should have matured to enable the apartment market to assume a position at the bottom of the established price hierarchy.

As affordability thresholds are breached for traditional housing within a location, the market seeks a lower cost alternative. Historically, townhouses have represented the next closest substitute to conventional detached housing as they provide a cheaper entry price point into a preferred location (trading-off land and building size).

Once the townhouse market becomes established within a locality and its own price levels breach affordability thresholds, an established house price hierarchy is evidenced and supportive

conditions are created for the emergence of a legitimate apartment market.

The scarce land supply situation within the highly desired housing markets of the Established—Inner LGAs has expedited the transition to the apartment built form within these locations as pricing thresholds for conventional houses and townhouses have been breached more quickly. Melbourne’s (unsustainable) house price growth through 2009-10 placed further pressure on housing affordability, and conditions became more supportive of apartments as the next substitute product.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 14: Progression of Housing Hierarchy

It is expected that in more normal economic and housing market circumstances, the progression through the housing hierarchy is more patient as demonstrated by the more gradual emergence of

apartment submarkets through the mid–late 2000s. With reduced reliance on peak investment sentiment to drive this evolution, apartment markets within nonprime locations will emerge more

organically and will require strong housing market and economic fundamentals to support the transition through the house price hierarchy.

6.2.4 Median House Price Ratio Retrospective analysis of market evolution provides strong justification for the rationale that an established house price hierarchy at threshold median values are prerequisites to apartment market emergence. An analysis has been undertaken of the median house price of individual suburbs relative to the Melbourne metropolitan median, to establish the Median House Price Ratio (MHPR) at the time its apartment market matured to a significant scale (considered to be approximately 300 contemporary apartment completions across several projects).

The adoption of this threshold reflects the observation that suburban markets have typically emerged following an initial market testing phase by a number of small projects to given financiers comfort about local market conditions rather than beginning with large-scale projects.

The MHPR has been calculated historically and analysed relative to the historic volumes of apartment completions within individual suburbs. This analysis has enabled the identification of the relationship between housing market prices

and apartment delivery across all suburbs where there are now a viable apartment markets.

The main findings of this analysis are as follows: • A partment markets emerge, and are later entrenched, in suburbs where the economic cost of apartment development is supported by the underlying MHPR and house price hierarchy.

• U nsophisticated, small projects (<25 apartments) begin to emerge when the MHPR for a suburb reaches around 1.4 which suggests a minimum suburb median house price of approximately $650,000.

delivery costs, and must support a higher economic cost (sale price) irrespective of market conditions, trends and sentiment.

The spatial distribution of the MHPR for individual suburbs highlights that the strongest potential market opportunity for apartments to be positioned within the established housing market hierarchy is concentrated, as expected, in the Established – Inner LGAs as well as selected Established—Middle LGAs to the east and around the bayside which indicate MHPRs of more than 2.0.

• F urther strengthening in the MHPR to around 1.5 creates conditions for smaller scale commercial projects (50–75 apartments at less than 5 levels) which suggest a minimum suburb median house price of around $700,000.

• C ommercial scale development (>75 apartments and more than five levels) is legitimised where the MHPR of a suburb exceeds 1.6 a which suggest a minimum suburb median house of $750,000. Larger scale projects require a stronger house price base due to higher 31

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 15: Median House Price Ratio as at 2011—Melbourne Suburbs

Source: Charter Keck Cramer

This indicator of market acceptability cannot be considered in isolation as a determinant of apartment market supply but rather is indicative of a suburb’s potential to accommodate apartment delivery within the housing market price hierarchy.

There are a wide range of other influences that will affect the actual delivery of supply.

32

“ Apartment markets emerge, and are later entrenched, in suburbs where the economic cost of apartment development is supported by the underlying Median House Price Ratio and house price hierarchy.”

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

7. Where Could Urban Renewal Occur?

7.1 Location Suitability vs. Actual Supply An analysis has been undertaken of Melbourne’s suburbs with respect to the comparison between each suburb’s location suitability to attract apartment demand (refer to Section 6.2.2) from a fundamental perspective and the actual delivery of apartments over the 2005–2014 study period.

It is clear through this analysis of the 257 residential suburbs within the Established Area LGAs that there is great variation within regions and even within municipalities. The main findings are as follows: • O nly 32 suburbs had a high level of supply (more than 500 apartments forecast to be completed between 2005–2014) matched to a higher location suitability rating (more than 50%).

• T here were 120 suburbs that, despite having a higher location suitability ratio (more than 50%), will achieve a supply response of less than 500 apartments.

Within the Established—Inner LGAs there were 19 suburbs within this category and a further 94 suburbs within the Established— Middle LGAs.

• T here were 105 suburbs with a low supply (less than 500 apartments) aligned with a low location suitability rating (less than 50%).

• A nalysis of supply responses between 2005–2011 to 2012–2014 highlights primarily that already high-performing locations tend to continue outperforming with there being few suburbs transitioning into better performing submarkets.

These findings clearly highlight that there remain significant gaps

between the potential opportunity for supply and the ability to actually deliver such supply. It is evident that there are still a large number of suburbs with appropriate location fundamentals, including local housing prices, that could support additional apartment development which suggests there are a range of constraints affecting the ability of the development industry to deliver supply and consumers to access additional housing choices.

Figure 16: Suburb Performance Indicator (2005–2014)* Established - Inner Established - Middle Established - Outer

Supply Response (No. Urban Renewal Apartments)

3,000 2,500 2,000 1,500 1,000 500 0%

20%

40%

60%

80%

100%

0 Location Suitability (Rating)

Excludes Melbourne, Southbank and Docklands Source: Charter Keck Cramer

*

33

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

The spatial distribution of relative performance across Melbourne is highlighted in the following map which reinforces the significant mismatches between potential opportunity and actual supply as well as the variation of supply performance within regions and individual LGAs. Figure 17: Major Residential Urban Renewal—Suburb Performance Indicators

Source: Charter Keck Cramer

7.2 Highest Potential Future Renewal Locations Given the importance of existing prices of housing to the potential to facilitate new housing supply, an analysis has been undertaken to establish the relationship between the market price for new apartments (across the Established—Inner/ Middle/Outer and Growth regions) relative to the prevailing median established house price.

This analysis has also considered the comparative opportunities for delivery of a typical one bedroom apartment either via typical conventional commercial construction technique (mid-rise

34

building of six storeys) as well as via domestic construction (in a low-rise, non-lifted building of three storeys).

This is considered important because the economic cost of production for new apartments differs somewhat between these construction techniques. This further implies that with the application of a commercial construction approach in less mature suburbs will push the required price beyond the necessary threshold to induce purchaser demand whereas domestic construction will result in a lower economic cost of production and facilitate more supply.

As an indicative rule, it is assessed that apartments have a much higher probability of being acceptable to purchasers in suburbs, subject to development suite availability and the planning framework, where the ratio between the market value of new one bedroom apartments and prevailing median house price is below 50%. Apartment markets begin to emerge and become supportable when this ratio moves below 60% because such a value represents a price discount a tangible incentive to consider as a substitute housing product.

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 18: Price Ratio Between New Apartments and Prevailing Established House Prices—Commercial Construction Compared to Domestic Construction LGA Name

LGA Type

1 Bed Apartment: House Price Ratio— Commercial Construction (Number of Suburbs within LGA) Supportable Possible (0%-50%) (50%-60%)

Banyule

Established—Middle

Bayside Boroondara

1 Bed Apartment: House Price Ratio— Domestic Construction (Number of Suburbs within LGA)

Unsupportable (60%+)

Supportable (0%-50%)

Possible (50%-60%)

Unsupportable (60%+)

5

8

2

5

2

8

Established—Middle

7

-

-

7

-

-

Established—Middle

9

-

-

9

-

-

Brimbank

Established—Outer

-

-

12

-

1

11

Cardinia

Growth

-

1

2

-

1

2

Casey

Growth

1

-

13

1

-

13

Darebin

Established—Middle

3

2

1

4

2

-

Frankston

Established—Outer

-

1

5

-

1

5

Glen Eira

Established—Middle

12

1

-

13

-

-

Greater Dandenong

Established—Middle

-

-

7

-

1

6

Hobsons Bay

Established—Middle

1

3

5

2

5

2

Hume

Growth

-

2

10

-

2

10

Kingston

Established—Middle

2

12

7

14

5

2

Knox

Established—Middle

1

3

6

1

3

6

Manningham

Established—Middle

5

5

-

10

-

-

Maribyrnong

Established—Middle

-

-

10

-

4

6

Maroondah

Established—Outer

1

6

4

1

6

4

Melbourne

Established—Inner

6

2

-

3

2

-

Melton

Growth

-

-

7

-

-

7

Monash

Established—Middle

5

5

2

10

2

-

Moonee Valley

Established—Middle

4

5

4

7

5

1

Moreland

Established—Middle

-

3

8

1

6

4

Mornington Peninsula

Established—Outer

2

4

6

2

4

6

Nillumbik

Established—Outer

2

1

1

2

1

1

Port Phillip

Established—Inner

7

2

-

9

-

-

Stonnington

Established—Inner

8

1

1

9

1

-

Whitehorse

Established—Middle

7

5

4

12

4

-

Whittlesea

Growth

-

-

7

-

-

7

Wyndham

Growth

-

-

7

-

-

7

Yarra

Established—Inner

1

8

-

6

3

-

Yarra Ranges

Established—Outer

-

2

8

-

2

8

TOTAL

89

76

145

128

69

110

Established—Inner

22

13

1

27

6

-

Established—Middle

61

46

62

95

45

29

Established—Outer

5

14

36

5

15

35

Growth

1

3

46

1

3

46

Source: Charter Keck Cramer

35

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Figure 19: Apartment Supply Propensity—Commercial Construction: 1 Bed Apartments

Source: Charter Keck Cramer

Figure 20: Apartment Supply Propensity—Domestic Construction: 1 Bed Apartments

Source: Charter Keck Cramer 36

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

The main findings from this analysis are as follows: • U tilisation of commercial construction suggests that 89 suburbs have the necessary house price structure to notionally induce new apartment supply given the ratio falls below 50%which includes a high number of suburbs in the Established— Middle LGAs. • T here are a high number of suburbs with a price ratio of 50% - 60% which indicates that these suburbs are on the cusp of notionally being able to support new supply over the short to medium term.

• T he market price of a new apartment is more than 60% of the prevailing house price in 145 suburbs which implies that new supply is not likely to be supported over the short term.

• I f apartment supply was switched to domestic construction there would be 39 more suburbs that could support new apartment supply than under observed in the current environment with a new band of suburbs also being on the cusp of being able to support new supply. The introduction of domestic construction would

certainly enable new apartment to enlarge its sphere of influence and become a much more mainstream housing choice.

• T here are significantly fewer suburbs able to support two and three bedroom apartments (even allowing a higher price ratio) given their higher delivery costs particularly under the commercial construction scenario.

37

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

8. Are Urban Renewal Objectives Being Met? 8.1 Overall Summary The overarching objectives for Melbourne’s Established Areas is that they accommodate 53% of the city’s future housing supply. A significant contribution to this supply will have to emerge from urban renewal projects because the availability of large remnant greenfield sites is now near exhausted.

Across Melbourne it is found that urban renewal objectives for housing supply have not been met in the preceding five years but will

intermittently exceed targets in the short term (2012–2014).

It is imperative to understand however that the forthcoming outperformance is driven by a series of one-off, cyclical events that will not endure. Urban renewal supply from 2015 will return to longer term trend levels as the influence of cyclical events in the apartment market recedes.

8.2 Recent Past (2006–2011) Over the 2006–2011 period, the underlying average net dwelling requirement for Melbourne was 31,430 dwellings per annum (or up to around 35,000 new dwellings per annum4 to allow for demolitions).

Over this same period major residential urban renewal provided an average of 5,520 dwellings per annum which equated to 18% of Melbourne’s net dwelling demand requirement.

Upon the assumption that 20+ dwelling projects account for approximately 50% of total dwelling supply5 the recently observed levels of urban renewal supply have been lower than required for the policy aspirations to have been met.

Within this context it is also pertinent to consider that the performance of specific LGAs is significantly

variable across Melbourne. The Established—Inner LGAs achieved the highest rates of supply but relative to underlying requirements this collectively supplied only 67% of its requirement. Selected Established— Middle LGAs also provided higher than average supply, which was primarily driven by the availability of large redevelopment sites, but collectively this equated to only 27% of the underlying requirement.

8.3 Short Term Future (2012–2014) The forecast level of major residential urban renewal supply in 2012–2014 will be considerably higher than observed in the past five years. Accordingly, this forecast supply will meet 47% of the forecast underlying dwelling demand requirement of 30,660 dwelling per annum across Melbourne6.

The Established—Inner LGAs will deliver more supply than underlying dwelling requirement forecasts

38

4

DPCD (2008) Victoria in Future 2008

5

indicate are required (139%) whilst the Established—Middle LGAs will also improve their performance (up to 53%).

At an aggregate city level, it is found that urban renewal objectives for housing supply have not been met in the preceding five years but will exceed targets in the short term (2012–2014). It is imperative to understand however that the

forthcoming outperformance is driven by a series of one-off events and a cyclical peak of conditions that will not endure.

Urban renewal supply from 2015 is anticipated to be somewhat lower as it returns to longer term trend levels as the influence of cyclical events, particularly relating to the apartment market, recedes.

Spatial Economics (2009) Housing Development Data

6

DPCD (2012) Victoria in Future 2012

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

8.4 Municipality Analysis It is evident that a number of LGAs within the Established—Inner and Established—Middle regions are experiencing significant turnarounds in their capacity to begin

delivering supply to meet demand requirements.

It is notable however that supply within these LGAs will be highly

concentrated in particular precincts, as dictated by planning policies rather than widespread.

Figure 21: Supply as a Proportion of Underlying Dwelling Requirements LGA Name

LGA Type

% Requirement Met by Urban Renewal (2006–2011)

% Requirement Met by Major Urban Renewal (2012–2014)

Banyule

Established—Middle

13%

8%

Bayside

Established—Middle

20%

76%

Boroondara

Established—Middle

32%

103%

Brimbank

Established—Outer

5%

12%

Cardinia

Growth

0%

0%

Casey

Growth

0%

0%

Darebin

Established—Middle

34%

39%

Frankston

Established—Outer

0%

4%

Glen Eira

Established—Middle

19%

22%

Greater Dandenong

Established—Middle

21%

17%

Hobsons Bay

Established—Middle

5%

20%

Hume

Growth

0%

0%

Kingston

Established—Middle

19%

60%

Knox

Established—Middle

7%

29%

Manningham

Established—Middle

15%

59%

Maribyrnong

Established—Middle

67%

57%

Maroondah

Established—Outer

8%

35%

Melbourne

Established—Inner

72%

127%

Melton

Growth

0%

0%

Monash

Established—Middle

28%

84%

Moonee Valley

Established—Middle

37%

98%

Moreland

Established—Middle

50%

48%

Mornington Peninsula

Established—Outer

9%

3%

Nillumbik

Established—Outer

0%

0%

Port Phillip

Established—Inner

41%

145%

Stonnington

Established—Inner

75%

153%

Whitehorse

Established—Middle

19%

71%

Whittlesea

Growth

10%

12%

Wyndham

Growth

3%

8%

Yarra

Established—Inner

58%

164%

Yarra Ranges

Established—Outer

0%

0%

TOTAL MELBOURNE

18%

47%

Established—Inner

64%

139%

Established—Middle

27%

53%

Established—Outer

3%

10%

Growth

2%

4%

Source: Charter Keck Cramer

39

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

9. Appendices

9.1 Data Tables Appendix Table 1: Number of Projects and Dwellings Completed 2005-2011 Dwelling Type

Number of Projects (Individual Stages)

Number of Dwellings

Apartments

756

59,701

Medium Density

255

7,476

Detached TOTAL MELBOURNE

119

6,615

1,130

73,792

Appendix Table 2: Completions by Project Type Project Size

Number of Projects

Number of Apartments

20 - 49 dwellings

385

12,108

50 - 99 dwellings

200

14,092

117

16,532

100 - 199 dwellings 200+ dwellings TOTAL MELBOURNE

92

31,028

794

73,760

Appendix Table 3: Completions by Building Height and Location—Number of Major Residential Urban Renewal Dwellings LGA Location

Building Height (Number of Dwellings) 1–3 levels (Non–Apts)

Apts 2–3 levels

Apts 4–6 levels

Apts 7–9 levels

Apts 10–14 levels

Apts 15–19 levels

Apts 20–29 Apts 30+ levels levels

Established—Inner

1,149

1,437

7,893

3,764

6,149

2,709

5,599

12,273

Established—Middle

8,232

4,521

10,458

2,110

1,592

64

396

0

Established—Outer

1,353

176

88

0

84

0

0

0

Growth Area

3,357

206

182

0

0

0

0

0

14,091

6,340

18,621

5,874

7,825

2,773

5,995

12,273

TOTAL MELBOURNE

40

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Appendix Table 4: LGA and Dwelling Types 2005–2014 Total Supply LGA Name

LGA Type

Apartments

Medium Density

Detached

TOTAL

LGA Rank (TOTAL)

Banyule

Established–Middle

296

78

-

374

23

Bayside

Established–Middle

1,025

105

-

1,130

16

Boroondara

Established–Middle

2,963

-

250

3,321

6

Established–Outer

-

199

444

643

20

Cardinia

Growth

-

-

-

0

n/a

Casey

Growth

-

-

-

0

n/a

Established–Middle

1,536

426

-

2,533

9

Brimbank

Darebin Frankston

Established–Outer

-

-

-

84

25

Glen Eira

Established–Middle

889

-

-

988

18

Greater Dandenong

Established–Middle

246

527

380

1,153

15

Hobsons Bay

Established–Middle

278

167

-

445

22

Hume

Growth

-

-

-

31

26

Kingston

Established–Middle

1,138

806

-

1,961

12

Knox

Established–Middle

40

195

272

507

21

Manningham

Established–Middle

898

107

68

1,073

17

Maribyrnong

Established–Middle

2,265

829

205

3,299

7

Maroondah

Established–Outer

198

134

448

780

19

Melbourne

Established–Inner

23,361

452

-

23,838

1

Melton

Growth

-

-

-

0

n/a

Monash

Established–Middle

1,462

980

634

3,076

8

Moonee Valley

Established–Middle

1,889

253

305

2,447

10

Moreland

Established–Middle

2,803

554

-

3,416

5

Mornington Peninsula

Established–Outer

66

80

48

194

24

Nillumbik

Established–Outer

-

-

-

0

n/a

Port Phillip

Established–Inner

6,365

-

-

6,563

2

Stonnington

Established–Inner

5,194

110

-

5,304

3

Whitehorse

Established–Middle

1,413

168

-

1,650

13

Growth

-

364

1,507

2,259

11

Whittlesea Wyndham

Growth

-

165

1,290

1,455

14

Yarra

Established–Inner

4,904

364

-

5,268

4

Yarra Ranges

Established–Outer

-

-

-

0

n/a

59,229

7,063

5,851

73,792

TOTAL MELBOURNE Established–Inner

39,824

926

0

40,973

Established–Middle

19,141

5,195

2,114

27,373

Established–Outer

264

413

940

1,701

0

529

2,797

3,745

Growth Area

41

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Appendix Table 5: Top 20 Suburbs by Dwelling Types Metro Rank

Medium Density (Suburb/No dwells)

Detached (Suburb/No dwells)

TOTAL (Suburb/No dwells)

1st

Melbourne (11497 apts)

Mulgrave (616)

Lalor (1108)

Melbourne (11497)

2nd

Southbank (4694 apts)

Bundoora (310)

Mulgrave (600)

Southbank (4694)

3rd

Docklands (3768 apts)

Dandenong (278)

Bundoora (528)

Docklands (3904)

4th

South Yarra (2972 apts)

Maribyrnong (266)

Croydon (448)

South Yarra (2972)

5th

Richmond (1923 apts)

Cheltenham (229)

Macleod (442)

Richmond (2112)

6th

Port Melbourne (1592 apts)

Maidstone (199)

Dandenong (380)

Port Melbourne (1671)

7th

Abbotsford (1590 apts)

Burwood (193)

Sunshine West (289)

Abbotsford (1650)

8th

St Kilda (1558 apts)

Richmond (189)

Kew (250)

St Kilda (1592)

9th

South Melbourne (1521 apts)

Mentone (183)

Keilor East (245)

South Melbourne (1543)

Prahran (1511 apts)

Coburg North (180)

Wantirna South (212)

Prahran (1526)

Hawthorn (1486 apts)

Northcote (174)

Sunshine North (155)

Hawthorn (1486)

10th 11th

42

Apartments (Suburb/No dwells)

12th

Bundoora (1190 apts)

Parkville (172)

Maribyrnong (95)

Bundoora (1393)

13th

Brunswick (1065 apts)

Ascot Vale (163)

Maidstone (70)

Brunswick (1242)

14th

Lalor (1059 apts)

Bonbeach (160)

Forest Hill (69)

Lalor (1223)

15th

Mulgrave (1001 apts)

Brunswick East (159)

Doncaster East (68)

Mulgrave (1216)

16th

Footscray (783 apts)

Coburg (143)

Ferntree Gully (60)

Footscray (1183)

17th

North Melbourne (772 apts)

Footscray (142)

Coburg (59)

North Melbourne (1174)

18th

Carlton (722 apts)

Sunshine West (138)

Mornington (42)

Carlton (1059)

19th

Maribyrnong (703 apts)

Mount Waverley (137)

Footscray (40)

Maribyrnong (990)

20th

Brunswick East (640 apts)

Docklands (136)

Ascot Vale (39)

Brunswick East (942)

Making the Numbers Stack Up — A Study into Major Residential Urban Renewal in Melbourne

Appendix Table 6: Urban Renewal: Total Dwellings by Activities Areas (2005–2011) Activities Area Type

Apartments

Medium Density

Detached

TOTAL

% Urban Renewal Dwellings in LGA

468

0

0

468

28%

0

0

0

0

0%

107

278

100

485

42%

Central Box Hill Broadmeadows Dandenong Footscray

862

0

0

862

26%

Frankston

84

0

0

0

0%

Ringwood

50

8

0

58

7%

Coburg

269

36

0

305

9%

Doncaster Hill

497

0

0

497

46%

Moonee Ponds

64

0

0

64

3%

Principal

Prahran/South Yarra

3531

0

0

3,531

67%

Preston–High Street

732

0

0

732

29%

0

61

0

61

9%

Altona

71

0

0

71

16%

Ascot Vale–Union Street

32

0

0

32

1%

Bentleigh

36

0

0

36

4%

Boronia

20

0

0

20

4%

Brunswick

119

0

0

119

3%

Carnegie

122

0

0

122

12%

Sydenham Major

35

0

0

35

1%

Fitzroy - Smith Street

Fitzroy–Brunswick Street

615

11

0

626

12%

Hampton

88

0

0

88

8%

Heidelberg

44

0

0

44

12%

Ivanhoe

38

0

0

38

10%

Kew Junction

90

0

0

90

3%

Malvern/Armadale

39

0

0

39

1%

Mordialloc

38

0

0

38

2%

Oakleigh

41

28

0

69

2%

Richmond–Bridge Road

708

17

0

725

14%

Richmond–Victoria Street

1387

41

0

1,428

27%

Sandringham

113

0

0

113

10%

Springvale

24

0

0

24

2%

1,571

286

100

1,873

Central Principal

5093

97

0

5,190

Major

3660

97

0

3,757 43

Property Council of Australia Level 7, 136 Exhibition Street Melbourne, Victoria 3000 T: 03 9650 8300 F: 03 9650 8693 vic@propertyoz.com.au www.propertyoz.com.au/vic