I grew up in Melbourne and love the city dearly, so returning this summer for a visit after a few years away has been a joy – and a relief.

At the risk of mangling the cliché, reports of Melbourne’s death have been greatly exaggerated. After
hearing so much gloom over the impacts of COVID on the city, it is a thrill to wander the streets and see them so pulsing with activity, the scars of the world’s longest shutdown fast fading.

But even as the streets come alive, one change in recent years is hard to miss: the growing prevalence of homelessness.

In tree-lined streets, desperate people are camped out with rucksacks and Coke bottles in a bid for
survival. And for every one of these visible homeless are many others in insecure housing, in hostels, couch surfing or forced to live in violent situations. (According to Melbourne City Mission, 22,000 Victorians are without a home). When we zoom back further, it is clear homelessness is part of a broader inequity in housing affordability, which has led to historic lows in home ownership among young people.

Just this week Centre for Population demographers have reviewed their forecast and concluded that
Melbourne is on track to surpass Sydney as the country’s largest city by 2031. While such growth is a
positive, it does reinforce the need to identify where we will house this growing population.

Take the Mornington Peninsula, where I joined with thousands of other Melburnians in seeking respite from the new year’s heat. Amid the sandy beaches and swank bout According to the Mornington Peninsula Shire, there has been a 31 per cent increase in rents over the past year, and there are nearly 4000 residents on the public housing waiting list.

The council is urging property owners currently leasing on Airbnb and similar sites to consider offering them for long-term rental instead, and for those holding holiday homes to consider leasing them

It’s a noble strategy, and accompanied by lobbying state and federal governments, but is unlikely to
achieve the change on the scale required to combat the problem. The state government is not blind to the issue. Its Homes for Victorians strategy, announced in 2021, provides more than $2 billion in support for social and affordable housing.

But there are three big ideas beyond the strategy that are worth attention.

The first is supporting build to rent, which involves building properties to rent instead of selling them to individual buyers. Originating in the UK, the idea has been on the radar of several state and territory governments in Australia to grow rental housing stock while encouraging longer-term leases. The Victorian government got behind the idea in 2018, and since then, a handful of projects have moved forward. There’s a lot riding on governments and developers getting this right.

Then there’s the inertia provided by stamp duty. By the state government taxing the transaction, empty-nesters face a significant financial disincentive from downsizing to a smaller home. If you can better fit families to home sizes that meet their needs, you can improve housing affordability. Replacing stamp duty with a land tax is politically challenging but not impossible; the ACT is now halfway through a 20-year effort to do it.

And the third idea is to shift our attitudes toward medium and high-density living. Globally, most cities of Melbourne’s population are far more compact and residents accept smaller living spaces in exchange for easier access to amenities. But Australians’ love affair with big backyards and detached housing means we collectively resist efforts to go that way.

Hundreds of public housing apartments empty as waiting list grows

Once, the problem was supply of these dwellings. But now they have been built in Melbourne, we need to remove the stigma attached to living there. It is telling that according to the Australian Bureau of Statistics, in the five years to September 2022, the median sales prices for established houses in Melbourne rose 27.7 per cent, while the equivalent for attached dwellings was only 14.8 per cent.

As the post-COVID population boom attests, Melbourne has a lot going for it. The city offers a lifestyle few other places can match. But unless the city can make real progress in finding affordable homes for people who call the place home, it will fail to live up to its potential.