Melbourne finds itself at the epicentre of a dramatic housing policy transformation, with the Victorian government implementing a suite of reforms described as a "planning policy revolution." Spearheaded by Premier Jacinta Allan, these changes aim to tackle the affordability crisis head-on, marking a significant shift from decades of planning inertia.
The Rise of the YIMBY Movement and Systemic Change
For years, the planning conversation in Victoria was dominated by the "not in my back yard" (NIMBY) sentiment, where local opposition frequently stalled new developments. However, the emergence of the "yes in my back yard" (YIMBY) movement has catalysed a profound change in political will. Yimby Melbourne, formed in February 2023, quickly moved from expecting to be a grassroots campaign on individual projects to influencing systemic, state-wide policy.
Lead organiser Jonathan O'Brien notes the group's surprise at the government's receptiveness. "We were able to make a lot more meaningful systemic change in two years than any other reform group," he stated, praising the state Labor administration for being evidence-led and forward-thinking. The group, which includes many older owner-occupiers, stresses its independence from property developers.
A Cascade of Reforms: From Targets to Fast-Tracking
The government's reform agenda has been rapid and wide-ranging. It began by adopting enforceable housing targets for local government areas, a key recommendation from Yimby Melbourne's April 2024 report. This was swiftly followed by the landmark announcement in 2024 of rezoning land around 50 train and tram stations for higher density housing, a move that sparked localised protests in affluent suburbs like Brighton.
The changes extend far beyond rezoning. The state has introduced a fast-tracked townhouse code for low-rise apartments and duplexes, made subdivision easier, scrapped mandatory car-parking rules for new builds, and overhauled infrastructure contribution schemes. The most significant legislative change came in December, with the biggest overhaul of the state's Planning Act in decades. This reform slashes approval times to as little as ten days and limits appeal rights primarily to direct neighbours.
Capacity, Criticism, and Construction Cost Challenges
Analysis by the Grattan Institute suggests the scale of change is monumental. The new townhouse code and activity zone rezonings could increase Melbourne's zoned housing capacity by about 1.6 million homes, equivalent to 70% of the city's existing stock. Brendan Coates, director of the Grattan Institute's housing program, states these reforms are more ambitious than comparable efforts in New South Wales.
However, the Planning Institute of Australia (PIA) has voiced significant concerns. Senior policy officer Kat Smith argues the reforms lack a "coherent or integrated" agenda and that blanket rezoning ignores local context. The PIA warns that the townhouse code strips councils of the ability to consider environmental hazards, public transport access, and locally developed sustainability standards when assessing permits.
A major hurdle now is economic viability. Coates warns Melbourne has become a "victim of its success". Increased housing supply has kept prices lower than in other capitals, while soaring construction costs, partly driven by the state's own infrastructure "big build," make new developments less financially attractive. This tension is reflected in a severe drop in property sector confidence in Victoria, which sits 24 points below the national average.
The Road Ahead: Heritage and Foreign Investment
Advocates and analysts agree on the next frontier: heritage reform. 29% of residential land within 10km of Melbourne's CBD is under a heritage overlay, which YIMBYs argue protects low-quality dwellings that could be redeveloped into more homes. O'Brien describes these as "old, mouldy homes that are share houses" that could be better utilised.
Another point of contention is Victoria's foreign purchaser additional duty—an extra 8% stamp duty—which critics like Coates fear may deter the international investment needed to kickstart large projects. The government defends the tax, arguing first-home buyers shouldn't have to compete directly with cashed-up foreign buyers.
As the dust settles on this two-year blitz of planning changes, the debate is no longer about whether to build more homes, but how to ensure they are well-located, well-designed, and ultimately, financially feasible to construct. The YIMBY movement may have won the ideological battle for density, but the practical war to deliver housing at scale is just entering a new, complex phase.
