Melbourne’s Suburban Rail Loop and housing affordability
There is more to do than just build a railway
Melbourne has extreme growing pains[1]. The city’s population has increased from 3.4 million in 2000 to over five million in 2020. The 2010s saw average annual population growth of over 2.3%. This is a growth without parallel for a city in the developed world.
The Victorian Government is implementing a massive metro-rail loop to deal with the problems associated with the growth of Melbourne. The Suburban Rail Loop (SRL) is the largest single infrastructure project ever implemented in Victoria. The SRL will be 90 kilometres long, constructed largely in tunnel. It will have 15 stations at the intersection transfer points to the existing radial lines. A complete cost estimate is not available at present but it is likely to exceed $100 billion.
The SRL Business and Investment Case[2] (BIC) defines the project as transformative:
Melbourne will need infrastructure that not only enhances how people move around the city, but that also changes where people choose to live and businesses choose to locate. Major infrastructure has the potential to transform the shape and growth trajectory of a city. Businesses and households make decisions about where to locate and live in response to changes in travel times and improved accessibility. In turn, this trend redirects the property market, intensifying urban development and creating a shift in urban form.
Melbourne’s urban sprawl is the prime motivator for this transformation. Melbourne is now more than 100 kilometres wide from the west to the east and is continuing to spread like water on glass. It is your quintessential suburban city with detached (bungalow) housing to the horizon and beyond. This sprawl is causing the city to choke with traffic and is constraining its economy.
Many cities are contained in one sense or another but not Melbourne[3]. There is no mountain range or massive river or historical circumstance to have contained the city and so it has spread across the plains to the west and the gently undulating hills to the east. It can continue to spread. This lack of containment is such that the Government has had to invent a boundary. It is called “the Urban Growth Boundary” (UGB)[4].
The BIC divides the problems of Melbourne’s urban sprawl into three — a constraint to economic growth, an excessively high cost of infrastructure and services provision and an inequitable access to housing, jobs and services.
The “vision” is that the SRL as the transformative piece of infrastructure will solve these problems. According to the BIC, the SRL will improve distribution of work places, and allow greater choice as to where to live, shorten travel times and make more effective use of existing infrastructure with all of these leading to an optimisation of economic productivity, connectivity and liveability.
The argument presented in the BIC for this enabling is reasonable although there must be some uncertainty regarding the rate and extent of likely transformation and whether the priority settings for the SRL and other projects are correct. However, with regard to the third problem — inequitable access, there is a strong argument that SRL alone is likely to aggravate rather than ameliorate the problem.
The BIC defines the major social issue of affordability/liveability in the following way[5]:
Affordability is a key barrier for many households looking to buy or rent in Melbourne’s established inner and middle ring suburbs. This is encouraging some households to move to the outer suburbs in search of more affordable choices. Diversity of housing type is also limited in Melbourne. For example, there is a lack of medium and higher density housing suited to families with children, particularly outside inner Melbourne. Evidence suggests that some Melburnians would prefer to live in medium and higher density housing closer to amenity and services if there were suitable and affordable housing choices in these places.
More people are living further away from key centres and their places of work. Key workers, such as teachers, nurses, paramedics and fire and emergency workers, and non-public sector workers such as cleaners, retail and hospitality staff are especially affected as they are increasingly unable to afford to buy a home near their jobs. Access to employment opportunities is a key factor for a person securing a job. As people live further away from jobs, more are likely to choose work that may not fully align with their qualifications and skills. This entrenches economic disparity. Inequitable access to services also diminishes social inclusion and overall community health and wellbeing.
So, to paraphrase — young families, particularly essential workers are forced into “exile” on the urban fringe because they cannot afford to live elsewhere.
This is a twin-edge difficulty — in the established suburbs, where “connection” is already reasonable, detached homes are unaffordable and apartments and townhouses are not built for people with children.
How will the SRL solve this problem? The BIC argues that the SRL will facilitate a choice where there is currently none through the following actions:
Amend policy and planning controls to facilitate mixed use development near stations and employment centres
Increase social amenity to develop healthy, safe and sustainable communities
This is the activity centre concept that was originally presented in Plan Melbourne[6]. The idea is that new higher density urban centres adjacent good transport will be an attractive home for young families. This idea fails to comprehend the complexity of the growing and grave problem of housing unaffordability in established suburbs.
Housing affordability is a problem that has become extreme over the last two decades. Since 2000, we have seen the cost of housing rise at a rate far exceeding wage increases. There are many factors contributing to the problem including the mining boom selective wage increases, falling interest rates and easier credit, centralisation of employment in the larger cities, declining provision of social housing, developer “land banking”, taxation concessions and discounts for property investors, stamp duty, population growth and immigration and slow planning approval processes.
It is a problem that will not be solved by a railway! Government policies and practices have facilitated the flow of capital into property rather than productive activities. Those most affected by this are the first home buyers[7] or the very people that are expected to populated the new higher density precincts or activity centres.
So, will the SRL precincts be affordable and highly liveable places for young families? The answer is probably not. In fact the BIC argues a contradictory position. It argues that property prices in the precincts will rise because of their connection attractiveness.
I have looked closely at one of planned SRL “precincts” namely Heidelberg, which is about 12 kilometres northwest of the Central Business District. A Structure Plan has been prepared for Heidelberg in line with the Plan Melbourne specification. At one level the Heidelberg SP presents an impressive range of what might be called “raw” attributes for an attractive higher density centre. However, whilst the Heidelberg SP area is already over 50% higher density development, the whole precinct has very little housing that is affordable or suitable for young families.
More generally, at present there is little higher density housing being built for young families anywhere in Melbourne. A recent media report[8] highlights this:
Melbourne renter Samantha said the idea of living in an apartment wouldn’t be unattractive if they were built to better standards.
“If they actually built apartments to fit a family instead of two-bedroom boxes with no windows or storage, apartment living could be a great, viable option,” she said.
“We do desperately need more higher-density housing in inner suburbs. But we’re at the behest of developers who are squeezing every dollar out of every new build.”
We all know what Samantha is talking about don’t we? The BIC reaffirms her opinion:
…there is a lack of medium and higher density housing suited to families with children, particularly outside inner Melbourne.
This failure to build liveable and affordable higher density homes is a key constraint to a successful transformation of Melbourne.
As a frustrated senior planner put it to me:
…the State Government has been trying to also address housing affordability and social housing provision — but was forced to dump its signature planning reforms (including new developer contributions proposals) because of negative responses from the housing industry who remain very powerful as a lobby group.
The BIC estimates that 30% of the benefits to be derived from the SRL will be through “improved liveability and thriving communities”. Specifically the BIC claims the following benefit:
Precincts with distinctive, high quality design and good access to services and amenities will support people to live locally, attracting population and employment. Improved living affordability, housing diversity and better access to high value, knowledge- based jobs will lead to reduced locational disadvantage. Supporting people to live and work locally will create healthy, connected and vibrant communities in Victoria.
This is a dream that denies the reality of what many young families face. This is that without major change in the housing policy across three tiers of government, the opportunity that the SRL presents for transformation will be thwarted. Young families will continue to find housing in the established suburbs to be too expensive thus leaving the urban fringe as their only option. So what will happen? The urban sprawl will continue unabated with the SRL assisting this rather than attenuating it.
The failure to provide affordable housing in the new precincts places in jeopardy at least half of the benefits claimed for the SRL in the BIC
In completing this essay, I pose the following questions:
Question 1.: How will affordable and liveable environments for young families/essential workers be created in the SRL precincts?
Question 2.: If affordable house is not available in the established suburbs isn’t it more likely that the SRL, in improving access across all the metropolitan area, will encourage further urban sprawl?
Question 3.: If the SRL fails to contain the urban sprawl, what impact does this have on the project’s benefit-cost ratio?
In conclusion, it is clear that despite the considerable merits of the SRL project, it cannot of itself solve the chronic housing affordability problem. This is a problem of generational significance that will constrain Melbourne’s development into the future. This is a problem that none of the major political parties will touch because of the considerable power of the vested interests that benefit from it.
Despite the SRL project being the largest infrastructure project ever attempted by the Victorian Government, it pales into insignificance compared to the social implications of the housing affordability crisis. Still we blindly think we can solve an issue by some tunnel boring and some steel and concrete.
I recently came across an old Irish proverb, — In the shelter of each other the people live. Our task is to bring those young families and essential workers to share shelter with the rest of us.
On this basis the SRL needs more work.
References and end notes
[1] For more detail on Melbourne and its history and a broader consideration of the SRL please read my essay, “Melbourne, a city on the move but to where?”.
[2] Suburban Rail Loop Authority, Suburban Rail Loop, Business and Investment Case, August 2021
[3] Melbourne has a population density of just over 500 people/km2. This is less than half the population density of that other great Australian city, Sydney.
[4] Alteration of the UGB requires a majority vote in both houses of the Victorian Parliament.
[5] Victorian Government, Suburban Rail Loop, Business and Investment Case, pages 18 and 19
[6] Plan Melbourne, 2017–2050, Metropolitan Planning Strategy, State of Victoria
[7] Home ownership since WWII has been traditionally over 80% but since 2000 it has been declining. For those entering adulthood after 2000, home ownership is only around 40% and unlikely to ever reach 60%
[8] Caitlin Cassidy, https://www.theguardian.com/australia-news/2022/jun/30/bye-bye-quarter-acre-block-more-australians-are-living-in-apartments-but-do-they-meet-our-needs