Revealed: $2bn social housing opportunity
Victoria has just a 'narrow window' to roll out a groundbreaking social housing strategy that could unlock 26,000 new homes and slash taxpayer costs by almost $2bn, or risk missing a once-in-a-generation opportunity.
An exclusive report by Swinburne University and Ys Housing, backed by the Community Housing Industry Association Victoria and ten community housing providers, reveals how amalgamating fragmented housing sites could supercharge the supply of affordable homes across Melbourne, Geelong, Ballarat and Bendigo.
The bold strategy would allow not-for-profit housing organisations to purchase neighbouring lots next to their existing homes, merging them to build larger, modern social housing projects at scale, without relying on private developers.
How this basic Melb unit blitzed auction
The discussion paper suggests the strategy could be expanded beyond the initial 26,000 homes, eventually delivering up to 65,000 new social dwellings with further funding, enough to wipe out Victoria's current social housing waitlist.
The report identifies 1637 sites that could be consolidated over a decade, cutting project costs by up to $250,000 per dwelling thanks to cheaper land and more efficient construction.
CHIA Victoria chief executive Sarah Toohey said the government had a 'golden but narrow window of opportunity' before rising land prices made these sites unaffordable.
'If we don't act quickly, it will mean fewer affordable homes for Victorians and a more expensive social housing budget in the long run,' Ms Toohey said.
'This is a chance for not-for-profits to build homes that are genuinely affordable, not hand prime land to private developers chasing profit.'
The model would cost the state an estimated $80m per year over 10 years, with long-term public savings forecast at $1.99bn.
Ys Housing chief executive Oscar McLennan said the plan would only apply to sellers already looking to move on, making it a 'voluntary and strategic' solution.
'Site amalgamation is a strategic and sustainable way to help safeguard Victoria's social housing future,' Mr McLennan said.
Monash University urban planning expert Dr Elizabeth Taylor has researched lot consolidation extensively and said it was a proven approach overseas that could deliver vastly improved housing outcomes, if supported by planning reform and long-term funding.
'Amalgamation is a pretty important tool internationally,' Dr Taylor said.
'It opens the door to better housing typologies, more green space and co-ordinated masterplans, instead of the site-by-site scramble we currently see.'
Dr Taylor said Victoria's planning system were still too focused on individual sites, particularly in Neighbourhood Residential and General Residential Zones, which account for most of the flagged locations.
'Most of these sites are not in activity centres where fast-tracking happens,' she said.
'Planning settings like zoning and carparking requirements make it hard to deliver the well-designed, 'missing middle' housing we actually need.'
The proposal also highlights the challenges faced by community housing organisations (CHOs), which, despite holding long-term land, often struggle to access finance for precinct-scale projects.
'CHOs are probably better placed than most to do this, but they face bigger financial constraints than private developers,' Dr Taylor said.
'Our current funding models are too short-term and fragmented. This approach needs real support to succeed.'
The new model aims to correct the system's current bias toward cheap infill townhouses and speculative high-rise towers, shifting focus to quality, longevity and liveability.
While the plan's backers emphasise it won't involve forced relocation, some tenant groups remain sceptical.
Renters and Housing Union (RAHU) secretary Harry Millward said any voluntary buy-up of neighbouring sites still risked pushing low-income families out of the area.
'This is gentrification dressed up as gentle density,' Mr Millward said.
'Community housing groups act like landlords, and this could quietly displace people who've called these neighbourhoods home for decades.'
But CHIA Victoria chief executive Sarah Toohey pushed back, arguing the plan would increase access to affordable housing where the private market had failed.
'Critics claiming to speak for renters have it wrong,' Ms Toohey said.
'Amalgamating sites for community housing could deliver tens of thousands of additional genuinely affordable homes, something the private rental market is failing to do.
'The properties next door to community housing may not even be rentals, let alone be affordable for low-income families who are increasingly priced out of the private housing market.'
The private rental market is failing, and expanding social housing through site amalgamation is an innovative solution.'
The proposal comes as CHIA Australia and PowerHousing Australia merge this week to create Australian Community Housing, a new national peak body representing over 160 community housing providers and 134,000 homes.
ACH chair Rebecca Oelkers said the newly unified group would speak with 'one voice' to help accelerate affordable housing delivery at scale.
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