Zoned out

The new residential zoning scheme for Victoria, released by the State government last year, has huge implications for the urban fabric and social diversity of our city. Seeking to demystify an incredibly complex and confusing system of regulations, Mitra Anderson-Oliver delivers an urban planning 1-0-1 on how the zoning changes might affect you and your housing dreams.

Statutory planning is not exactly the stuff of dinner party conversation. It’s part of the ‘dark matter’ of the city: most don’t know about it, or know how to know about it, or perhaps even want to know about it. Housing affordability though, is something that we can all relate to. Unless you are lucky enough to already own your home, you are probably painfully aware of how increasingly inaccessible the Melbourne housing market is.

In mid-2013 something happened in the deep recesses of Melbourne’s planning bureaucracy that, arguably, has the potential to make this situation significantly worse. A new zoning scheme for Victoria was released, replacing the existing residential 1, 2 and 3 Zones with three new ones: the Neighbourhood Residential Zone (affectionately called the ‘No-go Zone’); the General Residential Zone (‘Slow-go Zone’) and the Residential Growth Zone (‘Go-Zone’!). As the nicknames imply, the intention behind the new zonings was to provide greater certainty as to where we can expect more and higher density development, and conversely where we can relax and rest easy in the knowledge that our heritage streetscapes will be preserved.

So far, only two councils have had their new zones approved by the Minister for Planning: Glen Eira and Greater Dandenong, with seven having submitted but still awaiting approval, and nineteen others at various stages of completion.

The delay on approval of those that have submitted their amendments may have something to do with the fact that Glen Eira, as the first out of the blocks, took a particularly conservative approach, zoning 78% of their area as Neighbourhood Residential, or No-go Zone. This zoning allows no more than two dwellings on a lot (and with attendant restrictions on height and set backs making even this difficult) effectively putting a stop to the small scale residential in-fill development that has, over the past 10 years, supplied over a third of Glen Eira’s new housing. Other Councils have followed suit. For example, the City of Yarra’s new zone proposal seeks to apply the Neighbourhood Residential Zone to 77% of residential land, with 23% General Residential Zone and no Residential Growth Zone at all.

According to Terry Rawnsley, of SGS Economics and Planning, such restrictive application of development zones is effectively reshaping the housing market at the stroke of a pen. A significant portion of our inner ring development has, up until now, been delivered by your ‘ma and pa’ investors, taking out a second mortgage to, for example, convert a decent sized house block in Bentleigh into three or four semi-detached town houses. James Mansour, of property consultancy firm Charter Keck Cramer, agrees and adds that it is these “small-scale developers who are responsible for a significant supply of affordable new housing in established areas across Melbourne.” The high application of the Neighbourhood Residential Zone will decrease the opportunity and viability of this type of small-scale development, which will in turn increase our reliance on new supply from larger apartment projects, particularly in the Central City Region, which tend to cater towards the needs of investors more so than residents.

The problem, according to both Terry and James, is that it is going to become increasingly difficult to find affordable housing in Melbourne. We are already in a state of constrained supply not meeting demand, and by cutting off what has thus far been one of the more steady supplies of new, well located housing, prices are only going to go up, but supply can’t respond. By locking down our inner and middle ring suburbs, we are further entrenching the social and economic divide in our city, pushing demand for single detached dwellings further towards the fringe, with its attendants of ever-longer travel times, lack of access to jobs and services and escalating infrastructure servicing costs.

Exactly what the current State government was thinking in leaving it to local governments to determine how much new housing to supply in residential areas – and by implication how our city is to be shaped in the coming decades – is unclear. It is hoped that the current pause in approvals is suggestive of a high-level rethink on the wisdom of this approach.

On this point, Sam Nathan, from Charter Keck Cramer states in a recent report, “policy and industry stakeholders must do more to understand the tripartite relationship between property (as the delivery vehicle), town planning and economics to ensure the aspirations of a city are embedded in strategic policy”. Any disconnect between the short-term political aspirations of the day and the long term needs of the housing market, he says, threatens to undermine our ability to meet the housing and lifestyle needs of our growing population.

Strong leadership is required at the state and local government level to strike a balance between the protection of established residential areas for existing residents and the encouragement of new and appropriate housing supply for future residents. The high application of the Neighbourhood Residential Zone suggests that this leadership is lacking and that decisions are being made for political expediency rather than in the long term interests of the city.

Many thanks to Terry Rawnsley of SGS Economics and Planning, and James Mansour and Sam Nathan of Charter Keck Kramer for their input. To read more about the reformed residential zones for Victoria access a government fact sheet here.

Illustration by Marc Martin for Assemble Papers.