The UDIA warns the state government could worsen the housing crisis if it continues to stall on approving new land for housing development.

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Victoria’s peak development industry body is warning the state government risks exacerbating the housing crisis if it continues to stall on green-lighting land for homes in growth corridors.

The Urban Development Institute of Australia has cautioned that without approving new precinct structure plans (PSP) that guide residential estates, the government is in danger of impacting housing affordability at a time when supply is critically low.

In the last two years, there hasn’t been any PSP sites approved for housing.

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UDIA Victoria chief executive Linda Allison said without planning and a regular pipeline of new land ready for development, when demand eventually picks up, the state was going to be “caught out”.

“We’ve seen land prices rise in the in the last few years and that absolutely puts pressure on affordability,” Ms Allison said.

“PSP approvals have ground to a halt at a time where we need more housing choices, not fewer.

“If you don’t have a pipeline of land supply, then no-one’s buying land, and then no-one’s building houses.”

An average of 40,000 PSP sites in Victoria were approved a year from 2011 to 2014, compared to about 19,000 a year from 2015 to 2023.

And since 2011, the greenfield land price, or undeveloped land on the fringe of Melbourne, has almost doubled to about $400,000.

Ms Allison said Victoria needed a regular pipeline of new land ready to develop.

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Ms Allison added that the UDIA has been asking for certainty on greenfield land supply since Victoria’s Housing Statement was released nearly one year ago in September.

However, she said Victoria’s Planning Authority’s annual business plan, which outlines the projects and activities it will undertake each financial year and as set out in the Housing Statement, was overdue for 2024.

Ms Allison said it would be “unacceptable” if there was anything less than 30 per cent of the state’s 80,000 new homes target in greenfield zones.

At a UDIA conference Wednesday, CoreLogic head of research Tim Lawless said Victoria had a diminishing pipeline of new housing coming into the marketplace as building commencements fell and approvals remained very low.

He added that there was a lot of disincentives to invest in Victoria and there were “greener pastures” for investment in other parts of the nation.

“It seems a lot of the investment demand is now flowing into markets like Western Australia, Queensland and South Australia,” he said.

The Victorian Planning Authority has been contacted for comment.

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