Melbourne's massive transformation generates property market uncertainty

The Victorian Government’s focus on increasing urban density to address the housing crisis and limit urban sprawl is a worthy pursuit but the potential for negative impacts on local residents and prospective investors is high.

From years of construction to noise to properties cast into shadows in a city that craves any sunlight it can get, to home buyers and investors facing challenging decisions around future prospects for the new dwellings, the massive activity centre scheme will transform dozens of Melbourne suburbs.

The Victorian state Labor government announced housing activity centres where planning rules will be changed to allow high-rise apartments along Melbourne’s public transport routes as part of its housing statement in September 2023.

The announcement was not without public outcry, and community engagement for the 10 initial activity centres commenced in early 2024.

Spanning a mix of suburbs, the first 10 activity centres will be in Broadmeadows, Camberwell Junction, Chadstone, Epping, Frankston, Moorabbin, Niddrie (Keilor Road), Essendon North, Preston (High Street) and Ringwood.

This phase of the project is tipped to deliver 60,000 new homes, and the overarching project is scheduled to deliver an additional 240,000 homes across another 50 activity centres by 2051. The selection of the 50 activity centres hinges around the selection of areas that are well serviced by both train and tram zones and the new Metro Tunnel.

The specific areas are listed at the end of this article.

The goal of the activity centres is to enable more Victorians to live closer to jobs, public transport and green, open space.

With change comes concern though, and many residents in the various areas earmarked for change are worried.

One area that has raised concerns is Camberwell, a leafy and high-income suburb in Melbourne’s south/east.

Councillor Lisa Hollingsworth from Boroondara Council stated, “What council is not supportive of is the additional ‘catchment area’ that extends a further 800 metres from the boundary of the centre and will allow for development height up to six storeys in heritage areas and low scale single dwelling leafy neighbourhoods.

“Neither council nor the community have been consulted on this alarming new catchment area, which is illogical and representative of poor planning.”

Cr Hollingsworth also criticised the government’s lack of reasonable consultation.

“Any claims by the Minister for Planning that they have undertaken consultation with council on the latest version of their plans are completely false.

“Council only obtained a copy of the latest plans via the state government’s website, after media releases and announcements were made by the minister.”

Zoning and density changes, including maximum building heights, will impact local residents. From shadowing to loss of heritage appeal, public feedback has been strong.

The “core” precinct in each of the ten initial activity centres will house the tallest buildings. The maximum heights range from three to 20 storeys, (the latter being Ringwood’s limit). As distance ranges further away from the “core” precinct, maximum heights will be scaled down.

Aside from locals in the affected areas feeling apprehensive about the impact on their lifestyle, properties and land values, there is a broad concern about the cost of the project. Apartment construction been plagued by high materials costs and difficulties securing trades at a feasible price.

What do activity centres mean for investors?

Is the public response fair?

NIMBY, (not in my backyard) is a well-known acronym but change isn’t always easy. Aside from the concerns already mentioned, locals will also deal with construction noise, road closures and public transport stoppages.

But what does it all mean for the savvy investors? Will the activity centres bring higher household incomes and better productivity to the various neighbourhoods? And will land values ultimately increase?

The neighbourhoods that are impacted are all reasonably close to the CBD, with Dandenong being the furthest at 29 kilometres.

Many of these locales are already home to a blend of houses, townhouses and units. The increased number of proposed apartments is concerning for Melbourne investors, particularly given the city has suffered from an oversupply of apartments over the last 15 years.

Houses in streets that are adjacent to these activity centres will certainly be impacted by a different vista, streetscape and level of privacy.

The clever investors will focus on the houses in leafy, quiet streets within walking distance of the villages and transport services, but outside of audibility range.

Buyers who target apartments in these new activity zones need to be aware of the zoning, the outgoings and the internal floor area. Failing to do so could result in difficulty to finance the purchase.

Activity Centres (announced October 2024)

Sunbury to Cranbourne-Pakenham line using the Metro Tunnel

• Carnegie Station
• Murrumbeena Station
• Hughesdale Station
• Oakleigh Station
• Middle Footscray Station
• West Footscray Station
• Tottenham Station

Belgrave/Lilydale Line

• Hawthorn Station
• Glenferrie Station
• Auburn Station
• Blackburn Station
• Nunawading Station
• Mitcham Station

Frankston Line

• Toorak Village (58 tram)
• Toorak Station
• Hawksburn Station
• Armadale Station
• Malvern Station

Sandringham Line

• North Brighton Station
• Middle Brighton Station
• Hampton Station
• Sandringham Station

Glen Waverley Line

• Tooronga Station
• Gardiner Station & Glen Iris Station (combined)
• Darling Station

Activity Centres (announced February 2025)

Sunbury to Cranbourne-Pakenham line using the Metro Tunnel

• Springvale Station
• Noble Park Station
• Yarraman Station
• Dandenong Station

Sandringham Line

• South Yarra Station
• Prahran Station
• Windsor Station
• Elsternwick Station

Frankston Line

• Caulfield Station
• Glen Huntly Station
• Ormond Station
• Bentleigh Station
• Mentone Station

Glen Waverley Line

• East Malvern Station
• Holmesglen Station

Alamein Line

• Ashburton Station
• Riversdale/Willison Stations

Route 11 tram

• St Georges Road (Thornbury)

Mernda and Hurstbridge Lines

• High Street (Thornbury)
• Heidelberg Station

Upfield Line

• Brunswick Station
• Coburg Station

Inner Melbourne*

• Melbourne

Inner Melbourne*

• Yarra

Route 48 and 109 trams

• Kew Junction

*The program includes a cluster of inner city suburbs where, in collaboration with local government, the state government will identify specific opportunities for strategic redevelopment sites.