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Melbourne's Property Development Crisis

Like many people, I think, I have an instinctive contempt for property developers.

It’s not that I object to new apartment buildings, per se. There do seem to be a lot of people in Melbourne who think that three million was the perfect population size for our city, and since as far as they’re concerned we were “full” at that point, we should continue to have a housing policy based on only having enough housing for three million people. I’m not one of those people. Melbourne is about to hit five million if we haven’t got there already, and all of us need decent places to live. If we don’t want to become a sprawling car-centric hellscape,[1] that means the inner and middle suburbs need to become a lot denser than they’ve been historically – and yes, that means apartment buildings.

What I dislike is how this construction of apartment buildings is happening. Everything is completely atomised, every individual apartment block built in complete isolation with no consideration of the surrounding area. If we really wanted to densify our city sensibly, we would consider entire local areas at a time. There would be some kind of plan for what level of density was appropriate for an area, and from that we would:

None of the above ever happens, or at least not before hundreds of apartments have been built and thousands of new residents have been living there for many years! The government wants the sweet sweet stamp duty revenue from all the thousands upon thousands of apartments across the city being sold and resold (and speculated on – stamp duty grows ever-higher the higher property prices go), but they don’t want to invest money into health, education or infrastructure at anywhere near the speed our growing city actually needs.

Then the next reason I hate that the densification of our city is completely privatised and totally at the whim of individual property developers is that the only thing any of them care about is profit; they have no interest in providing housing that is actually suitable for a diverse range of people.

We’ve all heard the stories about the shoddy construction standards and outright negligence that goes into too many modern apartment buildings. Cabinet doors that fall off almost the second a tenant moves into the apartment. Non-existent insulation making you totally dependent on air conditioning to maintain a liveable temperature even on normal summer or winter days (let alone heatwaves or cold snaps). Pipes and the like which need replacing just a few years after construction. Sometimes, the problems are more serious again – flammable cladding, virtually guaranteeing that a fire that starts in one apartment will spread to all the others upstairs from it. Or a foundation so unsteady that cracks start running through the building and the entire thing has to be evacuated and abandoned. In these latter cases, it is of course the poor schmucks who bought apartments from these cowboys who have to pony up the cash to fix the problem, not the developers whose negligence actually caused the issue. They got their profit and they’re home free.

Then even if you ignore the fact that some of these apartments are falling apart within a few years, there is also the serious issue that there is no diversity of accommodation being built. Nearly all these new apartments are one or two bedrooms. A small number, perhaps one in 12, will have three bedrooms – and those will be so expensive that you could almost just buy a full house in the same suburb. There will certainly be no more than a tiny, tiny percentage which are built to be, say, accessible to people with reduced mobility (who may rely on a wheelchair or a walker to get around their own home, and may need things like handrails, a roll-in shower, and lowered countertops). It’s like in the minds of property developers, every single person in the city is one half of a dual-income couple with at most one kid. These are the only people they envisage living in these apartments.

I specify “living in”, because it’s pretty obvious the vast majority of these are not intended to be owner-occupied. The idea is that multimillionaire investors will buy up most of them to create vast property portfolios, and if they’re feeling magnanimous, rent them out to the working class.[2] Now I know there are many cities where the average person doesn’t expect to own property and renting for life is normalised (especially big North American cities like NYC, Toronto, San Francisco…) – but as a result these are cities where tenants have many more rights than tenants do in Australia. There’s no rent control here, there’s no ban on telling tenants to leave at the end of their lease term (indeed, if the owner sells up, you get asked to leave even if you’re in the middle of a fixed-term lease); until recently tenants weren’t even allowed to put hooks on a wall to hang photos. There is no such thing as having financial security in Australia without owning your own home – the aged pension here is only enough money to live on if you don’t have rent or a mortgage to pay. So, it’s a really serious problem here that first-home buyers can’t afford houses cos they’re all getting bought by property developers and we can’t afford apartments cos they’re all getting bought up by investors.

For people of my generation, there are pretty much three ways to get into the property market in this city (assuming you have permanent, full-time employment, which already excludes a lot of people):[3] either you have an inheritance to cover a huge chunk of the price, or you buy a too-small apartment and try to cram a family in there, or you buy a house in the absolute sticks and resign yourself to a lifetime of excruciating long drives in maddening dense traffic to go anywhere. Now I’m not gonna lie, my partner and I are fortunate enough that we’re probably going to fall into the first of those categories, at least eventually (maybe not before we actually raise a family). But it shouldn’t take family wealth just to secure yourself a modest home.

Now, these problems are not exclusively down to property developers. Investors and especially the government deserve their fair share of blame as well. If we really wanted to build homes for people, the process wouldn’t be this privatised free-for-all in the first place, but there would be comprehensive area plans and apartment blocks would not be built for profit. (Or at least, margins would be a lot slimmer as developers would be required to build to a high standard, construct larger apartments even if it means fewer in a block, and not build blocks covering an entire lot, edge to edge, so as to preserve/cultivate tree cover and allow runoff to permeate into the water table below.) It’d be great if new apartment buildings could be as attractive as the old houses they replace, instead of all ugly as sin, too. It’s this frustration, and not NIMBYism, that gives me my contempt for property developers.

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