Over the past 18 months, Victoria’s planning system has undergone one of its biggest shifts in decades. 

Planning in Victoria is moving away from a discretionary, Council-led system towards a more state-driven planning model focused on one key objective: delivering more housing, faster.

Faced with housing affordability pressures and population growth, the Government has introduced a series of reforms aimed at increasing density around transport, jobs and activity centres while reducing planning delays and approval uncertainty.

A Shift Towards Activity Centres and Density

The release of Plan for Victoria in 2025 established long-term housing targets for councils and directed future growth into activity centres and transport corridors. 

This was reinforced through the expansion of the Government’s Train and Tram Zone Activity Centre Program, which identified dozens of centres for increased housing and mixed-use development. The objective is to create denser, walkable, mixed-use precincts around transport infrastructure. 

The reforms have generated strong interest in sites, particularly in premium suburbs with strong apartment demand. Overall, developers remain cautious, with high construction costs, finance constraints and uncertain apartment demand continuing to affect feasibility.

Faster and More Certain Housing Approvals

One of the most significant reforms was the introduction of the Townhouse and Low-Rise Code in March 2025. 

The new “deemed-to-comply” system reduces council discretion where projects meet prescribed standards, making townhouse and low-rise approvals faster and more predictable.

Changes to the VicSmart pathway also streamlined approvals for dual occupancies and two-lot subdivisions, encouraging more small-scale infill housing. 

The Government has since extended this model into the apartment sector through the Mid-Rise Code, introduced in April 2026 for four-to-six-storey developments. 

Together, these reforms aim to reduce planning delays, minimise VCAT disputes and provide greater certainty for developers.

Broader Planning System Reforms

The Government also introduced broader legislative reforms through the Better Decisions Made Faster Act 2026 and the Housing Statement Reform Act 2025. 

These changes seek to modernise permit pathways, reduce procedural delays and accelerate housing delivery.

While industry has generally welcomed the reforms, some councils and community groups argue they reduce local influence and third-party appeal rights.

Opportunities Beyond Housing

The reforms are also reshaping opportunities in commercial property and social infrastructure.

As activity centres intensify, demand is expected to grow for:

• medical centres and allied health; 
• childcare and early learning; 
• retirement living and aged care; 
• pharmacies, wellness and convenience retail; 
• Flexible commercial and consulting suites. 

Healthcare is emerging as one of the strongest opportunities, particularly in locations near hospitals, transport and established residential catchments.

Childcare and retirement living are also expected to benefit from higher-density, service-rich neighbourhoods, although success will remain highly dependent on local demographics and market demand.

The Market Response

The reforms have increased planning capacity and improved approval certainty, particularly for townhouses and infill development.

However, the market response has been cautious.

For many developers, the biggest challenge is feasibility and what to build. Rising construction costs, taxes, interest rates and subdued demand continue to constrain new projects.

Victoria’s planning system may now support significantly more development than it did 18 months ago.

The question is whether the market can afford to deliver it.

The Role of Early Planning Advice

Across all these changes, one factor stands out: early planning insight is critical.

Engaging a specialist such as a Town Planner Melbourne can help you:

• Identify viable sites
• Understand planning constraints
• Align projects with policy direction
• Avoid costly redesigns

This approach ensures decisions are made with clarity, not guesswork.

Key Takeaways for Developers in 2026

To stay ahead in the evolving planning landscape:

• Think strategically: focus on long-term land use trends
• Plan early: don’t wait until design is complete
• Prioritise compliance: meet stricter upfront requirements
• Embrace sustainability: it’s now a core requirement
• Use data: support every decision with evidence
• Choose locations wisely: infrastructure and zoning matter

Conclusion

The planning system changes in Victoria in 2026 are reshaping how developments are conceived, assessed, and approved. Success is no longer just about having a good idea, it’s about aligning that idea with market needs and the intersection of location, infrastructure, and sustainability.

Developers who adapt to these changes early will minimise risk, streamline approvals, and maximise returns across a wide range of sectors from residential and commercial to healthcare, education, and NDIS housing.

If you’re navigating these complexities and need guidance on what to build and where to build it, PPC Urban Consulting Pty Ltd can help you make informed, strategic decisions with confidence.