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Melbourne is redefining its development zones

Melbourne is redefining its development zones

MELBOURNE’S property market is about to have one of its biggest shake-ups in a very long time.

The implementation of new development zones by metropolitan councils this month will change the urban landscape of our city as boundaries are set on where development can and can’t occur.

Matthew Guy, the Victorian Planning Minister, has described the new zones as a way of allowing development without risking suburbs with unique character. “By encouraging greater density in defined areas, including the central city, Fishermans Bend and other urban renewal precincts, we are able to protect quieter suburbs from overdevelopment,” he said.

There are also likely to be changes to the way the property market in these areas works.

Realestate has asked those on the coalface to explain what each of the new zones mean for you, the homeowner.


Mr Guy has said this zone is designed to protect against “inappropriate development”.

“Dual occupancies will usually still be allowed, but the most common type of home will remain a single house.”

And homeowners here are expected to be the long term winner, according to WBP Property Group chief executive Greville Pabst.

“The neighbourhood zones are going to have constrained supply and developers will be prohibited from developing in those areas,” he said.

“They (families) will pay a premium for those locations, they will be very desirable and over time that will drive prices.”

And evidence is already emerging of this in council areas where zones were adopted early.

Frank Ruffo from Hodges in Bentleigh, part of Glen Eira Council which changed its zones in July 2013, said premiums were already
being paid.

Mr Ruffo said that ordinarily it was tough to sell homes
with a heritage overlay, but recently this has changed with one such property selling for $190,000 above its reserve
price at auction as buyers tried to get away from the development zones.


Mr Guy’s intention is to restrict this zone to “be in residential areas with very good access to public transport, services, retail, and employment”.

The primary development
hubs for Melbourne’s suburbs, these zones are likely to see a short-term improvement in prices with a long-term shift to better affordability, according to Mr Pabst.

“There will be some short-term price gains in those particular areas, but as the neighbourhood and the streets change they are not necessarily going to be the areas that families want to live in,” Mr Pabst said. “You are increasing supply and that could have an effect on the price long-term.”

Tim Brown, a director at Castran Gilbert which specialises in selling development properties, said the way homeowners sell in this and the general residential zone could change too.

Instead of advertising development sites for sale real estate agents are likely to take them to a database of developers as off market sales.

He recently sold such a property without even opening the front door.

“A development site doesn’t require open for inspections and we generally sell it by tender rather than auction … based on what you can do with the land,” he said.

Most homeowners will need to bring in the experts to work out if this is the best option for their property, Mr Brown said.


This zone will also attract developers, though has more restrictions on what can be done, with Mr Guy anticipating a mix of house, unit and townhouse development.

Parts of the Glen Eira Council area have already proven popular with developers, according to Mr Ruffo. “We have seen growth in all of the zones, but mostly in the General Residential Zone,” he said. “Prices have increased up to 40 per cent in a very short time.”

Mr Ruffo said that since November last year his office had sold $40 million worth of property off market to developers in the area.

“The end price is probably a $400,000-plus premium. It’s incredible and we have seen that happen,” he said.

He’s also expecting homeowners may start banding together to tempt developers with bigger sites and said in November last year three owners in Carnegie sold together to one developer and picked up $4 million between them.

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