Geelong’s growth corridors and suburbs near train stations are expected to play a big part in building more homes in the city. Picture: Alan Barber
A fight over who pays for future state and local government infrastructure is threatening to derail plans to build more than 128,000 new homes and tackle housing affordability in Geelong.
It could take a permanent City Deal to fund the bill amid plans to take Geelong’s population to 500,000 by 2050 and avoid pushing the cost of building a new home in the city toward a $1m median price.
City of Greater Geelong Mayor Stretch Kontelj said the council was “up for the challenge” of chasing the 128,600 housing target by 2051, but “it could not come at any cost”.
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A long-term demographic shift is already testing Geelong’s capacity to support the additional development, with a nation-leading 2.4 per cent population growth rate that could see the region effectively double before the end of the century.
Villawood Properties executive director Rory Costelloe said Geelong’s problem wasn’t attracting people to the city, it was housing them.
“We’ve got to be ready for it. We have to think about how we attract people for skills. It’s where can we fit them in that’s the problem,” Mr Costelloe said.
Geelong’s Armstrong Creek growth corridor near Marshall. Picture: Alan Barber
MANAGING SUCCESS
Mr Kontelj said the City was faced with managing its success.
“We have an enviable region from a lifestyle point of view. The amenities, the environment, the job opportunities, the affordability of housing compared to Melbourne, traditionally has been stronger in this region,” Mr Kontelj said.
“But how do we reach that target without losing everything that is special about the Geelong way of life?”
To meet the target, Geelong requires close to 4900 new dwellings a year. The five-year average for building approvals in Geelong is about 3740 a year.
But the target stipulates that 70 per cent need to come in existing, or infill areas, which means more townhouses and apartment buildings in suburbs where existing infrastructure such as stormwater is already at its limit.
Mr Kontelj said future-proofing the stormwater system that’s already at capacity in numerous existing suburbs is a $300m project.
Mayor Stretch Kontelj said planning for future growth in Geelong was about managing the city’s success.
“When we have a weather event such as a semitropical storm, we’ll have pockets of Geelong – Newtown, Geelong West, Highton, Lara, Belmont – that flood houses. That means we’re already struggling with the current population, let alone what’s to come,” Mr Kontelj said.
“That investment, just in the case of the area around Geelong West and Newtown, is around $300m just to duplicate the current network. We can’t afford that.”
PropTrack senior economist Angus Moore said addressing housing supply is the only lever to improve housing affordability, but building more medium-density townhouse and apartment projects near major train lines made sense given the transport links.
“Improving housing affordability can really only come by building more homes where people want to live. Increasingly that is places like Geelong,” he said.
“It’s very hard for a train to service a suburb of sprawling detached houses versus apartment blocks where people can walk (to the station).”
DELAYS TO GROWTH
Bisinella Developments chief executive Richard Bisinella said the area to the west of the Geelong Ring Road represents the largest urban growth project in regional Victoria and is expected to accommodate more than 110,000 new residents, equating to around 40,000 new dwellings.
But 12 years after it was rezoned an urban growth area, it hasn’t contributed a single dwelling, which he said highlights the delays besetting the industry where land supply hasn’t kept up with demand.
The first precinct structure plan, which will allow development for about 3645 residential lots, is not expected to be finalised until late 2026 or 2027.
Bisinella Developments chief executive Richard Bisinella. Picture: Alison Wynd
There is no confirmed approval time frame for the largest precinct in the northern growth area at Lovely Banks.
Mr Bisinella said there is also considerable debate about the government’s 70/30 housing policy, which aims for 70 per cent infill development and 30 per cent greenfield growth.
“While higher-density housing has an important role to play, the issue in Geelong’s CBD does not appear to be a lack of planning approvals for apartments,” he said.
“Instead, it is about financial feasibility, and this same concern is now emerging in these new growth areas.”
ELECTION PRIORITIES
Ahead of November’s state election, Geelong’s council is advocating for three major initiatives to support the state’s development objectives:
* Establish a $2bn Residential Activation Fund where local governments could apply to fund essential infrastructure, such as water, stormwater, roads, sewerage, power, telecommunications, to be put in place before you can build homes.
* A $1bn Regional Fund would also support community infrastructure and business development-enabling projects.
* Make Geelong’s CBD a Special Economic Zone to revitalise the city centre and help the 17 permitted but stalled developments get out of the ground.
There are 17 approved permits for high-rise projects in central Geelong where development has not started. Picture: Alan Barber
Council chief executive officer Ali Wastie said a sharper growth-led approach to infrastructure planning and delivery needs to prioritise investment in community infrastructure where population growth and housing delivery is occurring.
“Geelong has received this target from the government and we are not shying away from that,” Ms Wastie said.
“We have to have the necessary funding for infrastructure to align with those housing commitments so communities receive the essential services early and not years after homes are occupied.
“Which you do see in growth areas like Casey, Wyndham, Melton, where the communities have come in, they’ve been promised good road infrastructure, good services, hospitals and there’s just this lag.”
ROAD WARRIORS
A new battle has opened between the state government, councils and developers over who pays for state-owned infrastructure, such as new highway intersections.
A panel that sets development contributions determined the state should pay for 89 per cent of the cost to upgrade the Midland Highway, including the intersection with Ballan Rd. But Mr Kontelj said the planning minister had since told the council it would pay zero, and wanted the cost pushed on to developers.
Mr Costelloe said getting the price of development contributions right was key to ensuring greenfield suburbs delivered affordable housing for Geelong in the future.
The cost to build a new intersection and upgrade Midland Highway and Ballan Rd is the centre of a battle between the state government, Geelong’s council and developer Villawood Properties. Picture: Google Streetview
“We paid for the land with top market prices based on the expectation that we’d only be responsible for our normal costs. Then as the project has developed, the Development Contribution Plans (DCPs) have gone through the roof,” he said.
“On top of that the government wants to get us to build all the state infrastructure as well.”
Mr Costelloe said regional Victoria is the most economical and most capable of delivering the region’s future growth.
“To have three hospitals, a university and the best education choice anywhere in Australia, (Geelong) has the infrastructure here to absorb a lot of Victoria’s growth. The state government can’t ruin that objective,” he said.
“If the council can’t get the DCP down to a reasonable level, and we end up paying for all the state-based infrastructure, then we will be forced to wait until land prices are over $500,000 for a block of land before we get started. Then we don’t become the affordable space.”
Villawood Properties executive director Rory Costelloe said Geelong’s housing affordability advantage will be compromised if the government development charges aren’t controlled.
COST CONCERNS
Mr Kontelj said the state’s decision would hurt the affordability of new homes in Geelong.
“The price of land will end up getting pushed up to potentially $700,000 a block, just for the land, let alone the cost of the build,” Mr Kontelj said.
“It will take the price closer to $1m for a house, whereas at the moment, the median price for an established home in Geelong is around $720,000. You’re not getting affordability for housing.”
The draft Creamery Road Development Contributions Plan prepared by the City of Greater Geelong would, if approved, result in developer contributions that are comparable in cost per developable hectare as other growth areas across Melbourne and in the regions, a state government spokesman revealed.
“The best way to make housing more affordable is to increase housing supply and Victoria is building thousands of more homes than any other state,” the spokesman said.
“We know there’s more to do which is why we’ve completely overhauled our planning system, made it easier to build townhouses, and slashed stamp duty for off-the-plan apartments.
“It’s only fair that developers in these areas help contribute to building the roads, facilities and open space in these communities that families rely on.”
The government’s housing targets across all 79 councils are designed to ensure every council plays its part in unlocking space for the 2.24 million homes needed by 2051.
The state government also recently launched a $15m Trunk Infrastructure Fund to invest in infrastructure to unlock land for industrial developments in regional Victoria and has slashed stamp duty for off-the-plan apartments, units and townhouses – cutting upfront costs, speeding up building, and saving homebuyers an average of $25,000.
peter.farago@news.com.au
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