Labor’s Housing Revolution: Rezoning Plans to Add 300,000 More High-Rise Homes

Allan’s plan faces criticism over consultation and high-rise concerns.

Men work on a construction site, building new apartments in Melbourne on April 4, 2023. William WEST / AFP via Getty Images

The Allan Labor government has announced 25 “Train and Tram Zone” activity centres to promote higher-density housing near key transport corridors. It aims to deliver over 300,000 new homes in Victoria by 2051.

The plan includes rezoning affluent suburbs like Prahran, South Yarra, and Windsor, where the state will assume planning control to boost housing supply.

Melbourne and Yarra city councils have been designated “city-wide activity centres” to unlock under-utilised land for development.

Premier Jacinta Allan and Planning Minister Sonya Kilkenny made the announcement at Noble Park on Feb. 27.

“It just makes sense to build more homes close to these stations, close to these existing services, because they’re also close to jobs, to schools and other opportunities that families look for when they’re looking at buying a home,” Allan said.

Key Transport Hubs to Drive Housing Surge

The rezoning plan designates five train stations along the Cranbourne-Pakenham line—Caulfield, Dandenong, Springvale, Yarraman, and Noble Park—as “activity centres” for higher-density housing.

Other key locations include several stations on the Frankston and Sandringham lines, and South Yarra.

Chadstone, currently served only by buses and multiple eastern suburbs stations will also be included.

On the Alamein line, locations will be designated as smaller activity centres, similar to Bentleigh, to accommodate limited growth due to lower train capacity.

A new centre is planned at Kew Junction, while Brunswick, Coburg, and tram corridors along High Street and St Georges Road in Thornbury have been added.

For Melbourne and Yarra, rather than rezoning entire precincts, the government will explore targeted upzoning of specific sites.

“There’s already quite a bit of height in those municipalities, so we’ll be going street by street, block by block, looking at where we can, with those councils, unlock that unused space that’s sitting there, particularly space that is close to those great public transport connections,” Allan said.

New Zoning Plan Sets Building Heights Across Victoria

Victoria’s updated rezoning plan will divide 10 key activity centres into two zones: a core precinct, the busiest area, and a surrounding walkable area.

Victorian Premier Jacinta Allan speaking to media during a press conference, in Melbourne, Australia, on Feb. 17, 2025. AAP Image/James Ross

The core precincts will allow the tallest buildings, with height limits set at 10 storeys in Niddrie, North Essendon, and Preston, and 12 storeys in Broadmeadows, Camberwell, Chadstone, Epping, and Moorabbin.

The walkable area will be further divided into inner and outer sections, with height limits scaling down. The inner area will allow buildings up to four storeys, or six on larger blocks, while the outer area will have a three-storey cap, with up to four storeys permitted on larger sites.

Projects in core precincts will follow a fast-tracked “deemed to comply” pathway, ensuring applications meeting height, street wall, and setback requirements cannot be rejected on those grounds.

MPs Accuse Labor of Ignoring Community Concerns

The plan, first announced in October 2024, drew sharp criticism.

In response to the initial announcement, member for Goldstein, “teal” Independent Zoe Daniel, criticised it for lack of consultation and planning, arguing that provisions for childcare, healthcare, schools, and transport were missing.

“Of course we need to address the shocking intergenerational inequity that governments have created, but again, the state government is telling the newspapers what’s going on, on its housing policy, before consulting with communities,” she said on X.

Former Liberal leader John Pesutto warned the plan would impose high-rise developments across Melbourne.

“All of Melbourne will be blanketed with these high-rises that are very expensive to build,” he said.

Pesutto argued that the high construction costs would make the apartments unaffordable for most Victorians and accused the government of failing to consult residents.

“You get no voice and you get no choice,” he said.

Business Council Backs Rezoning, Sydney Took Similar Action

Allan’s housing plan has gained support from the Business Council of Australia, which has proposed a similar rezoning strategy.

The council suggests creating a national fund to increase the housing supply and reduce construction costs, which would help address the ongoing housing crisis.

“We urge the federal government to create a national reform fund, like the one established in the 1990s, to incentivise states to address regulatory and planning bottlenecks that prevent homes from being built,” said CEO Bran Black.

The NSW government has also taken steps to create more housing in Sydney. Through its Transport Oriented Development (TOD) program, seven precincts around major transit hubs have been rezoned to allow high and mid-rise housing within 1.2 kilometres of rail and metro stations.

This initiative is expected to provide space for nearly 60,000 new homes and over 126,000 commercial and retail jobs.