Victoria’s population continues to expand, with trends measured over the past two years continuing to play out.  

Most recent figures show that in Q1 2024, Victoria contributed to exactly a third of the nation’s population growth, well above recent trends. Population continues to be driven by overseas migration making up 76% of the state’s total growth. Natural increase has simultaneously recovered to the highest level recorded.

The impact has been especially felt in metropolitan Melbourne, where median unit rents hit a record $575 per week in June 2024.  

Low vacancy rates are adding further strain to the already tight rental market. This situation is deepened by the sharp decline in housing supply. 

Melbourne’s townhome and apartment approvals continue to remain sluggish. Over Q2 2024, only 2,035 townhomes were approved – a small increase compared to the previous quarter, but still sitting at near decade lows.  

More concerningly, apartment approval figures sit at a near 20-year low of only 567 units approved over the quarter.  

Both of these figures will feed into low commencement and completion rates over the medium term.  

Despite stabilising material costs, Melbourne’s construction sector continues to be burdened by labour shortages, with government projects soaking much of the available workforce. 

Risk is also being increasingly shifted to builders, creating a less favourable climate for new developments as the only way to incorporate risk is to increase pricing.  

Strategic planning hurdles add to these difficulties, creating a less favourable climate for new developments.  

Looking ahead, Melbourne’s (and the nation’s) housing shortage is likely to persist. While strategic planning initiatives such as the Suburb Rail Loop East precincts (to accommodate over 70,000 new dwellings) and planning revisions are on the horizon, new development continues to be discouraged by planning resistance along with high levies and charges.  

Without significant and meaningful changes, the housing crisis shows few signs of easing.  

This article references findings from our September Metro Melbourne Apartments & Townhomes Market Report. Read the full report here.