Council is proposing to lease a council-owned site at 325-341 Victoria Street, West Melbourne for the purpose of affordable housing.

We have run a competitive process to select a community housing provider (CHP), and Council will consider whether to proceed in late October. If Council does proceed, the CHP would be responsible for securing funds, building and managing affordable housing at the site. The project would provide housing for people on very low to moderate incomes.

The site is currently used as a car park.

As this is a competitive process for the lease of council-owned land, there are probity constraints on what can be shared. However, key details about the recommended proposal are now available and include:

• All homes in the proposed development would be allocated to key workers. Key workers are people earning very low to moderate incomes who work in the City of Melbourne but have been priced out of living here, such as healthcare workers and childcare workers.
• It is proposed to be a four-storey development, with two building structures that include ground floor commercial spaces to activate Victoria Street. The proposal contains 32 homes – a mix of one, two and three-bedroom dwellings.
  Note: the final built form is subject to design review and planning approvals, and may change throughout this process.
• Commitment to high-quality and environmentally sustainable design, with a targeted 7 star+ energy rating.
• Retention of two established trees on site.

The City of Melbourne is strongly committed to delivering affordable housing across the municipality and has this in the Affordable Housing Strategy 2020 – 2030. This commitment includes delivering affordable housing on Council land through partnerships with State and Federal governments and community housing providers.  

Affordable housing is essential to ensure individuals and families can access safe and stable living conditions, regardless of their income level. People may require affordable housing at different times in their lives and may include those with families, older adults, or key workers such as cleaners, childcare providers, and healthcare professionals.

The demand for more affordable housing is significantly higher than supply, and there is an urgent need to take action.  The City of Melbourne currently estimates the city has a shortfall of 13,000 affordable rental homes and if we do nothing, this will reach 23,000 by 2036. 

Affordable housing helps support people who have been priced out of the city by providing housing at below the market rate – enhancing liveability in our city, the diversity of our community and the productivity of our economy.

Rent is capped at a percentage of household income, making housing genuinely affordable. 

Research by SGS Economics and Planning shows that investing in affordable housing is economically beneficial: in Victoria, for every $1 invested, there is a $3 worth of community benefit through improved worker retention, educational outcomes, enhanced human capital, health cost savings, reduced family violence, and lower crime rates.

No. This is long-term stable rental housing for key workers, those who help keep Melbourne running – such as nurses, teachers, retail workers, cleaners, hospitality staff, aged care workers, and childcare workers.

This is not crisis accommodation, transitional housing, emergency shelter or public housing. Those kinds of temporary accommodations are an important and necessary part of the housing spectrum, but the Victoria Street site will be dedicated to providing secure long-term housing for key workers. Tenants will be selected and managed by a registered community housing provider.

All homes in the proposed development would be allocated to key workers. These are people who earn very low to moderate incomes, and who work in Melbourne but have been priced out of living here, such as healthcare workers and childcare workers. The median income for target residents is around $66,000 – people who are essential to our city's daily functioning but whose wages haven't kept pace with housing costs.

Almost half of Melbourne's key workers currently commute over 20 kilometres because they can't afford to live where they work. This project addresses that specific need.

Key workers are people earning very low to moderate incomes who work in the City of Melbourne but have been priced out of living here. They include healthcare workers, child care workers, retail and hospitality workers, delivery drivers, teachers and nurses.

The median income for target residents is around $66,000 – people who are essential to our city's daily functioning but whose wages haven't kept pace with housing costs.

Almost half of Melbourne's key workers currently commute over 20 kilometres because they can't afford to live where they work. This project aims to addresses that specific need.

The City of Melbourne defines key worker housing as:

“Affordable rental housing that is appropriate for people who work within the City of Melbourne, who are required to be physically present to perform their work, and whose household earns very low, low or moderate incomes. The housing must be owned, or managed, or allocated and monitored by a Registered Housing Agency or registered charity to the satisfaction of Council."

In 2020, Council adopted an Affordable Housing Strategy committing to lease a Council-owned site for affordable housing by 2025. This project fulfils that commitment.

It also responds to a community-identified priority: 69.7 per cent of North and West Melbourne residents identified affordable housing as a significant priority through neighbourhood surveys.  

The State Government has a key role in ensuring housing supply. However, Council's Victoria Street project targets a specific housing need and complements rather than duplicates this work.

The Victoria Street project targets key workers – healthcare workers, retail staff, hospitality workers, teachers, cleaners, aged care workers, childcare workers – who earn too much to qualify for public housing but cannot afford private market rents in Melbourne.

This gap in the housing system means the people who serve our community daily are being pushed further from the city. Council's 2020 Affordable Housing Strategy recognises that housing affordability affects our economic sustainability and social diversity, which is why local government has a role alongside State Government efforts.

Together, these initiatives address different parts of the housing affordability challenge rather than duplicating effort.

Council will consider the proposal at its meeting on Tuesday 28 October 2025. Meeting papers are available now and include an overview of the recommended proposal.

Council will focus on the delivery of Victoria Street development and has deferred further consideration on leasing 44-60 Curzon Street, North Melbourne, for affordable housing.

In 2024, Council conducted formal community engagement on the proposal to lease Council owned sites on Curzon Street, North Melbourne and the Victoria Street site for Affordable Housing. During this period Council received over 1000 pieces of feedback through online surveys, conversations at in-person and online information sessions, written submissions, a focus group and signatures on a petition in relation to the proposal.

Following its consideration of this feedback, Council’s August 2024 decision also included the establishment of a Project Reference Group (PRG). The PRG was made up of 13 local residents, business owners and people with lived experience of housing challenges. The group developed Community Assessment Principles to define what good affordable housing should look like for this site. PRG members then assessed de-identified proposals against these principles. The PRG assessment carried considerable weight in the evaluation process, representing 20 per cent of the overall scoring.

This gave community representatives genuine and substantial influence over which proposal was recommended to Council, going well beyond the standard consultation approach for projects like this.

The Project Reference Group provided community input into decision-making on the project. In this case, 13 community members made up the Project Reference Group to inform Council’s decision-making in relation to the development of affordable housing at 325-341 Victoria Street, West Melbourne.

We were particularly seeking people who could represent residents, businesses / traders, local service providers, local interest groups and individuals who have lived or are living in social housing.

PRG members were selected through an expression of interest process promoted through Participate Melbourne, direct emails, Neighbourhood Portals, on-site signage, postcards, business door knocking, and community newsletters.

A principle is a guiding idea or standard. They are used to communicate what is important and influence how things are done or how decisions are made.

In this instance, the Community Assessment Principles (CAPs) developed by the PRG were provided to community housing providers as part of the competitive process. They helped guide the design, development, and management of affordable housing. Members of the PRG assessed de-identified proposals from the housing provers against the CAPs. The PRG assessment carried considerable weight in the evaluation process, representing 20 per cent of the overall scoring.

This gave community representatives genuine and substantial influence over which proposal was recommended to Council, going well beyond the standard consultation approach for projects like this.

At the October 28 meeting, Council will receive and make a decision on which community housing provider will progress to the next stage. In the meantime, you can:

• Review the Council meeting papers and, if you would like to, make a written submission regarding this agenda item (by 10am on Tuesday 28 October).
  
• Contact the project team with questions.

In addition, public notification will be provided through:

• Notification of the lease once contracts are finalised
• Planning approvals.

As this is a competitive process for the lease of council-owned land, there are probity constraints on what can be shared. However, key details about the recommended proposal are now available and are outlined below.

• All homes in the proposed development would be allocated to key workers. Key workers are people earning very low to moderate incomes who work in the City of Melbourne but have been priced out of living here, such as healthcare workers and childcare workers.
• It is proposed to be a four-storey development, with two building structures that include ground floor commercial spaces to activate Victoria Street. The proposal contains 32 homes – a mix of one, two and three-bedroom dwellings.
  Note: the final built form is subject to design review and planning approvals, and may change throughout this process.
• Commitment to high-quality and environmentally sustainable design, with a targeted 7 star+ energy rating.
• Retention of two established trees on site.

At this point we don’t have any dates for future stages of this project.

There are a number of stages this project would need to move through before construction would begin. If Council endorses the recommended proposal, the community housing provider would then need to secure funding for the project, and obtain planning approval.

Timelines for this process vary, but can take a number of years.

Council will partner with a community housing provider who will be responsible for securing funding to deliver and manage the project.

Council’s contribution is limited to the lease of the land.

Pending Council’s endorsement of the proposal, a planning application will be submitted by the community housing provider. The development will need to be a high-quality, well-designed building and align with Council’s Design Excellence Program.  

It will be designed to integrate with the surrounding neighbourhood and minimise impact on neighbouring properties and comply with relevant requirements of the planning scheme.  The recommended proposal has a commitment to high-quality and environmentally sustainable design, with a targeted 7 star+ energy rating and retaining the two established trees currently on site.

Council's technical studies show the neighbourhood can accommodate the loss of 47 spaces. Detailed surveys of on-street parking within a 3-4 minute walk of the Victoria Street site found that 59 on-street parking spaces remained unoccupied even during the busiest evening periods surveyed (8pm Friday), with 68 spaces available during daytime peak (1pm Thursday), out of 302 publicly available parking spaces in the area.

Council's first-ever Parking and Kerbside Management Plan, currently being rolled out, replaces decades of ad-hoc approaches with systematic, strategic parking management. For the first time, parking is being managed proactively across the municipality rather than reactively site-by-site. This comprehensive parking strategy is our commitment to managing parking holistically.

The Victoria Street proposal would be delivered within this broader framework and with future connections to Arden Station further enhancing transport options in the area.

Yes. Pending Council’s endorsement of the proposal, there are a number of stages this project would need to move through before construction would begin.  Timelines for this process vary, but can take a number of years.

In the meantime, the Victoria Street car park will remain open to the public until works begin at the site.