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The Victorian Parliament has approved the release of 24,500 hectares of new land for residential development on Melbourne's fringes, to meet growing demands for growth in housing construction.

Part of a wider 43,600 hectares that will be brought into Melbourne, the expansion of the city's urban growth boundaries will open the way for construction of a possible 134,000 new homes.

The state's Growth Areas Authority said the 24,500 hectare batch of land will be opened for residential housing, services, facilities, open space and infrastructure.

The Housing Industry Association (HIA) welcomed the city's overnight expansion, thanks to the passing of the legislation, which had been in doubt following opposition and delays.

“Land supplies in most growth corridors are dwindling so the Victorian Government’s expansion of the boundary is welcomed by industry,” HIA Victorian executive director Gil King said.

However, King said it has come much later than needed. "Homebuyers have experienced rising prices while the State Government delayed the expansion for more than a year,” he said.

“The Government’s decision to add a new tax on housing (the Growth Areas Infrastructure Contribution) and link the passing of the tax to the boundary expansion also works against the interest of home buyers as it will put pressure on prices in growth areas,” King said.

The Victorian Government has appointed the Growth Areas Authority to work with landowners, the development industry and local councils to complete 40 Precinct Structure Plans across Melbourne by 2012, thereby creating 90,000 promised new homes.

However, the HIA complains on 14 of those 40 plans have been completed.

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