Can Melbourne afford to keep growing outwards? – MASHAHER

The empty field on the south side of the train tracks just beyond Rockbank has no address; just another patch of weedy earth on the volcanic plains west of the city, sure to flash by unnoticed by the thousands of daily commuters on the Melton line.

But to Gurpreet Verma and his daughter Rhea it is a field of dreams, and they are counting the days until it will be divided into lots for the city’s newest housing estate.

Thornhill Gardens, as the estate has been named, will add hundreds more souls to what is already the fastest growing suburb in Australia.

Rockbank, which in 2011 was a semi-rural hamlet of just 2600 people, had by last year exploded in size to more than 27,000 people, gaining an extra 4300 residents in each of the past two years, census data shows.

The area is more than 30 kilometres west of the CBD, and its list of services is modest: it has a V/Line station, a bus that runs every 40 minutes, a primary school and a general store. Its appeal lies not in its amenity but the fact that it has some of Melbourne’s cheapest land for housing.

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Gurpreet Verma paid less than $300,000 for his 400-square-metre lot in 2020. He bought the land for his daughter Rhea, 21, who is studying podiatry at Monash University.

“I want to help my daughter because as a young kid it’s very difficult for her to get into the market,” Verma says.

Buying a home on Melbourne’s fringe, in a new estate with few services, is a rational trade-off for Verma, who is clear-eyed about what the area has to offer: a home among the western suburbs’ booming Indian diaspora, close to the Sri Durga Hindu temple, and terrible traffic congestion on the Western Highway.

“I know traffic is a problem as of today, but we’ve got to live with some pain to gain,” he says. “If the infrastructure was already there, then the price will go up. Since there is a lot to do in the infrastructure area, the price is still affordable.”

It will take time, but the state government will eventually build infrastructure for the area, such as the promised Melton Hospital and even potentially a new train station at Thornhill Park, which is unfunded but in the Victorian Planning Authority’s precinct structure plan.

“Once those promises are delivered, believe me, the price will go up drastically,” Verma says.

For decades, Melbourne has spread outward like spilled ink, first along the veins of its rail lines, then filling the car-dependent spaces in between. It has been the simplest and most popular way to provide the affordable housing that has underpinned the city’s expansion.

But there are signs that the Melbourne model for growth is fraying. The glut of housing released on the fringe each year has slowed to a trickle, industry data shows.

Builders have been under financial stress: Australian Securities and Investment Commission data shows that the number of insolvencies in the construction sector has skyrocketed nationally, from 1284 in 2021/22, to 2213 in 2022-23.

And there is a renewed state government push to concentrate 70 per cent of new housing in established suburbs, and build 80,000 new homes a year by going up, not out. But property sector advocates point out that 30 per cent of 80,000 is still a big target for the growth areas, and that the state is falling miles short.

According to Urban Development Institute of Australia analysis, just 7165 housing lots were sold in Melbourne’s greenfields last year, compared with 15,820 in 2022 and almost 34,000 in 2021.

“The cliff-fall in greenfield sales”, as the institute put it, has led Perth to eclipse Melbourne as the highest-selling capital city market last year, despite being less than half Melbourne’s size.

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The series of headwinds has analysts in Melbourne’s property sector concerned that the market is headed for an even tougher period.

“The short-term supply picture is not good,” George Bougias, the head of research at Oliver Hume, told a packed room full of developers, urban planners and notably, Planning Minister Sonya Kilkenny at a Property Council of Victoria event last week.

“In terms of building approvals, we’re running at decade lows,” he said.

“My own view is … we will continue to face challenging conditions, not only due to the issues we’ve seen in the residential building industry, but also skilled workers and … very strong population growth.”

Bougias warned that Melbourne should look to Sydney, where land prices on the urban fringe have spiralled well out of reach for average income earners, for a glimpse into its own future.

“On an average value rate, Melbourne is now where Sydney was in 2017, and since then Sydney prices have doubled to $2000 per square metre,” he said. “I’m not going to forecast where Melbourne prices are going to go, but all indications are that we can continue to expect very, very strong price growth.”

On stage in the CBD hotel conference room, Bougias presented a slide that calculated changing land values on Melbourne’s fringes in three ways – all of which were bad news for average buyers hoping for a detached house and yard of their own.

Properties in the growth corridors are getting costlier, smaller and harder to come by. Homeowners chasing the Australian dream in Melbourne’s greenfields are being squeezed more every year, literally and figuratively.

According to Urban Development Institute of Australia data, in 2014 the median lot price in Melbourne’s greenfields was $204,000 and the median lot size was 445 square metres. By last year, median prices had almost doubled to $394,000, while median lot sizes had shrunk to 353 square metres.

Bougias said the profile of the average buyer in the greenfields was changing: surveys have found more professionals, and fewer average income earners such as tradies, teachers and service workers were purchasing properties there.

“The nature of the buyer has changed,” he said. “Currently around 50 to 60 per cent of all purchases are made by professionals.”

Urban Development Institute of Australia chief executive Linda Allison said that if the state government was truly focused on tackling the housing affordability, it would accelerate the release of land in the greenfields.

“From the industry’s perspective, if we want to get homes out of the ground quickly, it’s actually the greenfields that offer the best pressure relief valve for affordability at the moment,” she said.

Chasing the dragon

On the basalt plains outside of Bacchus Marsh, ecologists are on the hunt for a creature so elusive it went 54 years between sightings, and was presumed extinct. Teams have dug a series of pitfalls in the ground and created a grid of 200 artificial spider burrows among the thick clumps of native grass.

They are searching for the critically endangered Victorian grassland earless dragon, which was rediscovered at a single location near Bacchus Marsh last year and “is still considered highly imperilled”, according to the Commonwealth department of environment’s draft recovery plan.

The lizard’s known range is limited to the heavily fragmented native grasslands between Melbourne and Geelong.

The master’s mate on the British ship that transported the first government officials from Sydney to Port Phillip, John Norcock, described the western grasslands as “enchantingly beautiful” in an 1836 diary held by the National Library.

“The grasses, flowers and herbs that cover the plains are of every variety that can be imagined, and present a lovely picture of what is evidently intended by nature to be one of the richest pastoral countries in the world,” Norcock wrote.

The British grazed their sheep on the western grasslands with ruthless enthusiasm, and today, an estimated 0.5 per cent of pre-colonial habitat remains intact. Much of it butts up against the urban growth boundary between Melton and Werribee, the fastest growing residential corridor in Australia.

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But the rediscovery of the earless dragon led the Victorian Planning Authority to halt progress on three precinct structure plans for future housing and employment zones between Bacchus Marsh and Melton, so that survey work can be done.

Ecolink senior ecologist Dr Stuart Cooney is searching for the dragon and says they are incredibly hard to detect. The search has been a more costly and time-consuming process than usual.

“It’ll be ongoing for quite a while now,” he said. “It’s an order of magnitude bigger and more time-consuming than for other threatened species because we need to check the traps daily … it’s a cryptic species, quite hard to find.”

But finding the dragon itself is not necessarily the end goal. “A lot of what we do is not based on seeing the animal; it is about finding suitable habitat, and there is plenty of suitable habitat out there.”

Just north of the search area, on the northern banks of the Werribee River, lies Bacchus Marsh’s market garden district, part of Melbourne’s fruit and vegetable supply.

The lower house of the Victorian parliament commenced hearings on Friday for its inquiry into securing the state’s food supply. A key concern of the inquiry, expressed again and again in submissions by farmers, planners and councils, is that development on and just outside of Melbourne’s periphery is encroaching into some of the state’s best farmland.

New housing and tourist activity such as boating at Wyndham Harbour is generating traffic problems for established farmers in Werribee South, the City of Wyndham said.

The Mornington Peninsula Shire Council said rising demand for rural living – turbocharged by the pandemic – is pushing up land prices in the green wedges and bringing farmers into conflict with new residents who value the area for its amenity, not its agricultural productivity.

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Moorabool Shire Council, which is centred in Bacchus Marsh, took a shot at the Allan government’s recently released green wedge protection plan, arguing that it wrongly prioritises housing affordability in farming areas.

“Dwelling affordability in inappropriate locations should be a lesser consideration than the need to protect agricultural land from speculation caused by the allure of rural lifestyle properties,” the council’s CEO Derek Madden wrote.

RMIT professor in sustainability and urban planning Andrew Butt has studied changing land use patterns in Melbourne’s peri-urban areas closely.

Butt warns Melbourne is beginning to hit the geographical limits of potential growth, despite the continuing lobbying of property interests to open up new areas for greenfields housing.

“We are running up the Hume corridor now because it’s the least worst option in terms of land, but we are already up to the Great Divide. Melbourne is about to cross over into the mountains.

“In Gippsland we are clearly encroaching upon what has been really viable agricultural land with reasonable rainfall. And in the west there’s lots of options for growth, but they’re running fewer and fewer. Are we going to build right to the walls of prisons?”

Butt said the allure of cheap land on the urban fringe had always been a myth, once the wider costs to society are calculated.

“We seem to be incapable of building the sorts of social and physical infrastructure those places need, like transport and schools, and the cost factor is one big one. It’s an utterly inefficient way for us to build a city.”

The state’s infrastructure adviser has commissioned research into the cost to taxpayers of building homes in new estates on the city fringe, and found the extra cost is in the billions.

Research by the Centre for International Economics, commissioned by Infrastructure Victoria, found the state must invest about $59,000 more for every new home in Melbourne’s growth areas to deliver the infrastructure to service people’s needs, compared to building a more compact city.

Infrastructure Victoria chief executive Jonathan Spear said taxpayers were also subsidising greenfields development through tax incentives such as stamp duty concessions and first homeowner grants.

“Really, the only places that qualify for first homeowner grants because they are new builds under $750,000, are largely only in the greenfields. That is costing us between $150 million and $200 million a year to push people to the greenfields,” Spear said.

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Meanwhile, Rhea Verma is looking forward to moving into her unbuilt home in her unbuilt estate and one day raising a family of her own there. She thinks less about what it lacks today than what it will be in future.

“I think it’s a great area,” she says. “Being a new estate it comes with lots of opportunities, like new schools. Everything will be fresh and untouched, which makes it that little bit more enticing to live.”

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