Melbourne could need an extra 1 million homes

A new Victorian state government report, Melbourne, let’s talk about the future, predicts Melbourne will need an extra million homes in the next 30 to 40 years as the population increases to more than 6 million.

The need for more homes will be compounded as the size of the average household decreases with number of people over 65 is expected to double in the next 20 years as our population ages at the same time as the percentage of households that have children declines.

The report suggests that an expanded Melbourne central business district could add 220,000 new residents in the next three decades.

The massive residential expansion would mean a ten-fold increase in the number of residents living in the CBD.

Yes it will start to look like Manhattan and this will require a significant increase in infrastructure and community services such as schools to cope with the change.

But controversially, the report also revealed most existing homes in Melbourne are too expensive for households on a median income, and only a handful of suburbs – mostly on the city’s fringe – passed the affordability test.

Households earning the city’s median annual income of $70,300 have few suburbs to choose from. Even the cheapest suburbs require an annual household income of between $67,000 and $90,000 to pay the mortgage and other bills.

The report also identifies the need to increase job options in Melbourne’s growth areas so fewer people are compelled to drive long distances to work. Long journeys were leading people to choose less-skilled jobs closer to home.

”Even short trips under one kilometre in the outer suburbs are made by car,” it says. ”Around 90 per cent of people in the outer areas and 40 per cent of people in the inner areas drive to work.”

Not surprisingly the state opposition has criticised the report and accused the Baillieu government of “destroying our envied way of life.”

Melbourne’s growth will now doubt create many social and infrastructure problems, but will also underpin its property markets ensuring those real estate investors who own the right type of property will benefit from the demographic changes.

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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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