Picket Fence Expectations Must Go, Industry Told

“You can’t have both."

Dr Brendan Rynne was very clear as he stood on the stage at The Urban Developer Melbourne Property Outlook 2024 event: if we want to solve the housing crisis, densities must increase.

The KPMG chief economist said that concerns, often raised at local government level, that high-rise development would affect neighbourhood character, amenity and heritage didn’t do the situation any favours.

“You can’t sit there and say, ‘My kids can't afford a house—do something about it, government’, and then not be prepared to accept that you are going to have to have higher density within inner and middle suburbs,” Rynne said.

His comments echoed sentiments expressed by others in the industry during the past year as solutions to the crisis are explored and enacted.

Densification, Rynne explained, was the only way to increase housing affordability.

“Anything that you do on the demand side to increase affordability such as home loan schemes just goes straight into increasing prices,” Rynne said.

“It does absolutely nothing for housing affordability.”

“The only way housing affordability is going to increase in this country is by increasing supply.”

Rynne said that could only happen if the size and amount of land per household was decreased.

“The idea of the quarter-acre block in the inner and middle suburbs is a thing of the past,” Rynne said.

“It has to be higher density.”

Development Victoria housing director Heather Maxwell agreed.

“I think it has been made clear in the Housing Statement that this Government is absolutely more interested in providing housing in established suburbs and that requires us to look at density,” Maxwell said.

Developers also feel it is time to drop the quarter-acre dream.

▲ Development Victoria housing director Heather Maxwell speaking at The Urban Developer Melbourne Property Outlook 2024 event.

LK Group chairman Larry Kestleman told The Urban Developer that Melbourne’s unique position also needed to be considered.

“Densification is definitely part of the solution,” Kestleman said.

“I think we as Australians still remember what it was like and talk about quarter-acre blocks, living close to the city, living close to Mum and Dad—that’s not reality.”

“And that’s not the global reality if we want to be a global country—no one in Paris is thinking that the first house that their mum and dad help them buy will be on the Champs Elysee.”

Kestleman said there were still opportunities in terms of land for housing.

“I always scratch my head because we keep talking about affordability and the lack of land but there is a lot of land available,” Kestleman said.

“But you have to look at each city a bit differently and, for me, the biggest opportunity that Melbourne has is land.”

“That opportunity is between Melbourne and Geelong so from a government’s point of view, how do we add more services? How do we encourage more businesses, offices, schools? How do we develop that almost into a second city?”

▲ LK Group chairman Larry Kestleman speaking at The Urban Developer Melbourne Property Outlook 2024 event.

Rynne said that decreasing the square area for each household, especially in infill areas, would allow the government to more easily develop mid and high-density housing without the need to focus on service and infrastructure delivery to outlying suburbs.