With Melbourne set to expand to “the size of London” by 2050, the federal government is backing a project to substantially expand the city’s rail network with a $3.8 billion investment.
This announcement, which is part of the upcoming federal budget that is set to be handed down on 12 May, will see the Commonwealth chip in $3.8 billion for the Suburban Rail Loop (SRL) East, a 26-kilometre underground rail line designed to connect Melbourne’s eastern and south‑eastern suburbs.
Nearly $4 billion will go towards Suburban Rail Loop East, as part of the 2026 federal budget. Picture: Getty
The investment is being positioned as a major driver of housing supply, with the rail corridor expected to underpin the delivery of around 70,000 new homes across Melbourne’s eastern and south‑eastern suburbs over coming decades.
SRL East involves a 26-kilometre underground rail line connecting Melbourne’s existing radial rail network through a new orbital route. The line will create interchanges with four established train lines at Cheltenham, Glen Waverley, Box Hill and Clayton, while also linking rail services in four directions, including regional V/Line services on the Gippsland Line.
By improving cross‑city connectivity, the project aims to support higher‑density housing in established suburbs, reducing pressure to push new development further into Melbourne’s outer fringe.
Victorian minister for housing and the Suburban Rail Loop Nick Staikos said the project was essential to Melbourne’s long‑term growth.
“By the 2050s, Melbourne will be the size of London – Melbourne needs an orbital rail connection that will cater for this growth and better connect people to jobs, education and healthcare,” he said.
Several measures to address Australia’s housing shortage have already been revealed ahead of this year’s budget announcement, including that $45 million has been earmarked to fast‑track environmental approvals across housing, energy and resource projects.
Housing and jobs around station precincts
The housing uplift tied to SRL East is expected to be concentrated around station precincts, rather than spread evenly across surrounding suburbs.
In 2025, the Victorian government released draft structure plans outlining how new homes could be delivered around six SRL East stations at Box Hill, Burwood, Glen Waverley, Monash, Clayton and Cheltenham.
These plans are expected to be finalised later in 2026.
Beyond housing, the SRL East project is also expected to deliver broader economic benefits.
The rail line will improve connectivity between major employment, education and health precincts including Monash University, Box Hill, Clayton and Burwood, supporting productivity by reducing travel times between key centres.
The project is forecast to support around 3000 jobs during construction, with up to 8000 ongoing local jobs expected once the network is operational.
Tunnelling for SRL East is scheduled to begin by the end of this year. The project is expected to be completed in 2035.
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