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Shaping the growth of Victoria’s cities

Choosing Victoria’s future: 5 urban development scenarios explores how different city shapes and growth patterns impact the state’s economy, the environment, and the quality of life of Victorians.

Infrastructure Victoria modelled 5 different, possible urban development futures for Melbourne and our largest regional cities over 30 years. We explored the impact of different city shapes on where people choose to live and work, the jobs and services they can access, how much land is used for housing, travel patterns, the impact on our environment and the infrastructure that is needed.

The 5 scenarios we modelled are:

  • dispersed city: Melbourne’s growth areas have many more detached homes
  • consolidated city: Melbourne’s inner and middle areas have many more medium-density homes
  • compact city: Melbourne’s inner areas have many more high-density homes
  • network of cities: regional centres have many more homes
  • distributed state: regional towns and rural areas have many more homes.

The results of our scenario modelling tell us that more compact cities perform better on many indicators including:

  • More compact cities offer businesses better opportunities to hire great staff and connect with customers and markets. Victorians would be up to $43 billion better off by 2056 with more compact cities compared to growth being dispersed across the state.
  • More compact cities also mean more land for agriculture and wildlife habitat. A sprawling, dispersed city consumes an extra 30,000 hectares of land compared to a compact city – equivalent to over 12,000 times the field size of the Melbourne Cricket Ground.
  • People living in dispersed cities would spend up to 70% more time in congested traffic to get to jobs and services.
  • Over 25% more people would use public transport in a more compact city than in a dispersed city.
  • Infrastructure in a dispersed city costs the government about $41 billion more by 2056, or $59,000 extra for every new home built, compared to a compact city.

The future shape of Melbourne and our regional cities will have big impacts for our quality of life, the economy, and the environment as Victoria grows.

The current pathway of growth is more people living away from existing infrastructure in new suburbs on the urban fringes of our cities. Our evidence shows that this delivers worse quality of life and limits opportunities for Victorians. But it’s not too late to turn that around.

Our report makes 5 recommendations to the Victorian Government to help achieve more compact and connected cities. It also suggests ways to reduce some of the challenges that come with more compact urban development.

Picture6 Use a new plan for Victoria to reinforce established area growth, set regional city urban growth boundaries, and include housing targets for the established areas of Victorian cities. Use these targets in land use framework plans, regional growth plans, and the Victoria Planning Provisions.
Picture7 Develop and publish long-term plans for infrastructure sectors to meet the policies and targets set by a new plan for Victoria.    Use these integrated land use and infrastructure plans to decide infrastructure project funding.
Picture8 Reform infrastructure contributions, remove taxes and subsidies that fuel dispersed growth, and change planning rules to create more compact cities in Victoria.
Picture4 Plan for and deliver infrastructure that supports more people and jobs locating in established parts of major regional centres,  including local transport, energy, water, and digital infrastructure.
Picture5 Plan for efficient and resilient electricity distribution infrastructure. Stimulate development and use of zero or low carbon     materials and building construction and operation methods that reduce greenhouse gas emissions.


The following reports informed our analysis:

SGS Economics and Planning, Urban development scenarios, Part A: Land use scenarios and Part B: Impact assessment framework report, 2022

This supporting document includes land use scenarios and presents 5 plausible urban development scenarios for Victoria, including an overview of the scenario forecasts, modelling method, assumptions, logic, and narrative. It also identifies a framework to measure the potential environmental, social, and economic impacts of each scenario.

This document informed work undertaken by the Centre for International Economics in assessing the environmental, social, and economic impacts and measuring infrastructure costs for each scenario.

The Centre for International Economics, Economic, social, and environmental impacts of alternative urban development scenarios for Victoria, 2023

This supporting document describes the assessment of the economic, social, and environmental impacts of the scenarios and the infrastructure costs associated with each. Infrastructure costs were estimated using a methodology specific to each sector. Costs vary by scenario due to differences in existing infrastructure capacity, the shares of development in new versus established areas, as well as differences in regional population density, dwelling types, and employment composition.

The study measured economic, social, and environmental impacts using indicators most related to where people live and work, the type of housing they live in and those that are most significant. The research found large differences in the social and economic performance of different city shapes, with the compact city and consolidated city scenarios performing more strongly than other scenarios.

Arup, Urban development scenarios, Strategic transport modelling, 2023

This supporting document summarises the strategic transport modelling undertaken to assess the 5 urban development scenarios. The research used the Victorian Integrated Transport Model at 2 time points, the years 2036 and 2056, with different land use assumptions for each scenario.

WT Partnership, Urban development scenarios transport infrastructure costs – capex / opex cost estimates, 2023

This supporting document summarises the approach to developing high level order of magnitude capital expenditure and operating expenditure cost estimates for transport infrastructure. These costs are based on several rounds of strategic transport modelling undertaken by Arup using the Victorian Integrated Transport Model.

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