Illustration: Ron Tandberg.

Illustration: Ron Tandberg.

Melbourne is becoming a city of “super-dense” towers, packed with tiny apartments that would be banned in Hong Kong, New York and London.

A scathing report from Melbourne City Council shows some of the city's newest developments are up to 10 times as dense as permitted by law in some of the world's most urbanised centres.

Sydney, London and Adelaide all have rules that ban new one-bedroom apartments smaller than 50 square metres. But in Melbourne, 40 per cent of the city's newest apartments are smaller than this.

The boom in shrinking homes is being driven by a market that satisfies the needs of overseas investors at the expense of residents, according to the Melbourne City Council's draft housing strategy.

The report warns Victoria's capital “is in danger of leaving a lasting legacy of poor-quality housing”, because of a lack of enforceable density or height controls.

Investors seeking the best financial returns buy 85 per cent of Melbourne apartments, driving demand for smaller properties unsuitable for families.

Only 9 per cent of units built between 2006 and 2012 had more than three bedrooms, but even those tended to be expensive penthouses.

RMIT planning expert Michael Buxton said the city was failing to invest in affordable housing for people aged 24 to 42. Professor Buxton said it was a group that did not want to live in the outer suburbs or in tiny apartments in the centre of the city.

“The [market is] based on short-term needs for investors,” he said. “We are going to cause a legacy of unwanted high-rise dwellings.”

Council experts have called for the development of new apartment design standards for the city. These new standards could include rules to ban very small apartments.

Planning chairman Ken Ong said 50 square metres had been suggested as an appropriate figure for one-bedroom apartments. “Personally I still think 50 square metres is still too small," he said. "I'm inclined to go to 55 square metres and 70 square metres for the two bed-rooms."

These reforms would have to be enforced by the state's Planning Minister through a planning amendment, Professor Buxton said.

The only density controls in Melbourne's Hoddle Grid are calculated by individual block rather than development, which makes the guidelines difficult to enforce, according to the council report.

“The result is often very high density development, sometimes over 5000 developments per hectare,” the report said.

The draft plan also proposes rules that would force developers in urban growth areas and the Hoddle Street Grid to make 15 per cent of new housing affordable. Those changes are in response to a severe shortfall in affordable housing.

Key workers such as receptionists, cleaners and hospitality workers are now being priced out of suburbs within an hours commute to the CBD, council research has found.

Even some renters with incomes up to $100,000 a year, including nurses and teachers, are considered to be in “housing stress”.

Visit www.participate.melbourne.vic.gov.au to have your say about the report.

aisha.dow@fairfaxmedia.com.au