Victoria Fast-Tracks Luxury Apartment Projects Under Affordable Housing Program

Property developers in Melbourne are obtaining fast-tracked planning approvals for luxury apartment projects by making cash contributions to a state social housing fund rather than including affordable homes on site. The Development Facilitation Program, expanded in September 2023, gives the Victorian government decision-making power over significant residential developments that contribute to affordable housing.

Applicants can qualify by promising funding equal to 3 percent of construction costs to the Social Housing Growth Fund.

A $316 million, 115-apartment project in Hawthorn received approval in March after a previous 45-dwelling permit neared expiry. Developer Sun Property Group is marketing the site as a refined luxury residential development in Melbourne's private school belt.

A premium retirement village in Ivanhoe East that had been rejected by the local council and the Victorian Civil and Administrative Tribunal was approved last August after design changes and a proposed cash contribution. Villa Maria Catholic Homes, the charity behind the project, declined to comment.

A $320 million tower on St Kilda Road and a four-building complex backed by billionaire James Packer in the City of Boroondara also received fast-tracked approvals. The Boroondara project is set to deliver about 19 affordable homes out of 194 apartments.

The state government says more than 11,000 homes have been approved under the scheme, with over 20 percent dedicated to social or affordable housing. It reports more than $25 million has been promised to the Social Housing Growth Fund, which received an $860 million budget boost.

"Planning reforms like the Development Facilitation Program are why Victoria continues to build and approve more homes than any other state," a government spokesperson said. Jane Oldham, who heads the Boroondara Community Group, said developers can promise a 3 percent cash contribution to secure faster approval.

She stated the projects should deliver affordable housing for those waiting for it. Affordable housing expert Kate Raynor said policies with flexible contribution options have a history of failing to deliver housing where needed at scale. She noted there is no guarantee funding will be spent in the local government area where the development occurs.