There is a housing shortage in Melbourne with the supply of housing unable to keep up with the growth of the population.  Melbourne is simply not prepared for the boom in its population and it must embrace higher density living if the demand for new homes is to be met.  The Urban Development Institute of Australia (the “UDIA”) has said that despite the record highs of development there is still a shortfall of over 9,000 new properties in the past couple of years. If the current trend continues, it will lead to an undersupply of more than 50,000 homes by the year 2020.  The chief executive of the UDIA says that the lack of proper planning for population boom has been perpetuated on a federal state and local level in government.  With a population growth forecast that shows no signs of slowing, there is a constant under-representation by government agencies on all levels. A mismatch between the forecasted population and planning and development means that there is not enough housing starts to meet the population growth demands in Melbourne.  The Victoria government has been working to improve its infrastructure but many parts of communities within Melbourne are fighting against further development. What community, government and industry all need to realize is that there is a population growth and this is not something that can be stopped or changed and there needs to be a better plan for it.  Inner suburbs in Melbourne are connected to jobs and services but development and higher density seems to be taboo. The building industry needs to educate the community in Melbourne so that it can be made to understand the crisis that is brewing.  The answer to the issue is not simply building more homes.  The location of sufficient housing is one of the biggest challenges faced by developers and the expansion of fringe areas does not necessarily mean that the jobs will follow. House and land packages located on the fringe of Melbourne will sell for less than the median price of over $800,000.00 but housing affordability is going to be much worse.  The competitive advantage of Melbourne over Sydney is geographical restrictions faced by Sydney preventing them from building outwards.  There is simply no room for urban sprawl in Sydney and not as many options as Melbourne. Victoria house prices have not increased as much as other areas of Australia, meaning the people who want to enter the housing market still have affordable price point options.  If there is a lack of building to provide adequate housing stock due to red tape, then substantial pressure is going to be placed on areas that are already established along with the entire housing market. Unfortunately, expanding at the fringe is not the answer to Melbourne’s problems.  Extended commutes from far-flung suburbs is not going to enhance a person’s productivity and it can contribute to other types of stress.  Housing needs to be built closer to a selection of good employment options and that means that some jobs should be taken out to the suburbs. A part of the economic strategy of Melbourne was to ensure that land on the fringe of the city was cheaper than Sydney so that the economy would receive a boost by attracting more people.  However, population growth is not a sophisticated economic strategy and the implications need to be thought through to consider the implications of the sustainability of the economy. The government needs to harness those economic gains from the growth of the population and then put that back into the community through initiatives such as land tax.  Most people want to live close to infrastructure and their employment and this means that house prices will rapidly grow in the middle and inner zones.  Land tax allows the government to invest in more affordable housing in areas where wealthier residents live so that there is a good social mix within the community.