It wasn't always this way. For more than 100 years, the narrow strip of water that is the Yarra defined the two Melbournes. The mansions of Toorak sat (almost) side by side with the slums of Richmond over the river. The proud and growing city of Melbourne. Credit:Luis Ascui The renaissance of inner city living has seen white collar workers attracted inwards, transforming former slums such as Richmond and Collingwood, and pricing blue collar workers further out. As a result, we are witnessing a generational shift. Melbourne's most liveable suburb is now north of the Yarra – as are 10 of the top 20. Our ring roads have replaced the river as Melbourne's demarcation of socio-economic division, although the transition from the liveable inner to the less liveable outer suburbs is gradual. Of course, world class liveability in our inner suburbs has its downsides. It creates huge residential demand in a small area, pushing housing prices higher and out of reach for many. Melbourne undoubtedly has some of the world's most liveable suburbs, but they are increasingly in areas that many Melburnians cannot afford.

So questions arise. If liveability is such a desirable aspect of place, and Melbourne is consistently rated as best in the world at it, how can more Melburnians get to enjoy the benefits? A view from the fringe, where infrastructure poverty is a huge problem. Credit:James Davies Firstly, and most obviously, higher density housing allows more people to live in the more liveable areas, which improves physical access to liveability, and places downwards pressure on house prices, which improves financial access to liveability. This is why apartments offer such a great public service. Secondly, and more contentiously, higher density living can improve many of the attributes of liveability. How? Higher population density increases the economic viability of many of the services and much of the infrastructure that underpin liveability, such as shops, cafes, schools, public transport, cultural facilities and even the quality of telecommunication services. The final estimate for business investment in 2015/16 is $12.74 billion, which is 15.4 per cent lower than investment in 2014/15. Credit: Paul Rovere

Alas though, higher density housing is often resisted, under the argument that too many people in too small an area will undermine the very liveability that attracts people to the area in the first place. This is why, throughout much of liveable inner and middle Melbourne, apartments are prohibited or limited to insignificant or unattractive areas. In Ashburton for example, ranked 23 in our study of liveable suburbs, apartments are banned across 95 per cent of its residential areas. There are sound reasons for this resistance to higher density living. If a place gets high density development wrong, the results can be catastrophic – with increases in crime rates and congestion levels, and loss of privacy, tree cover and open space. Higher density doesn't threaten liveability. Rather, it can be a precondition for it. So, is liveability helped, or harmed, by higher density? Our analysis suggests it is helped. There is a correlation, and perhaps a causation, between density and liveability, with higher density suburbs supplying more services and facilities that people want and need closer to where they live. Fears of "overcrowding" appear overblown in a city that has among the world's lowest density.

Of course, apartments aren't for everyone. For the outer areas – very liveable, we believe, by world standards – comprehensive masterplans are in place, and the will to improve is strong. The key is delivering services and facilities earlier and embracing urban technologies. Time certainly helps; East Melbourne has had the benefit of 178 years since Hoddle's first plans. Everyone will have different ideas of what liveability means to them, and no suburb has got it completely right (or wrong). Lower ranked suburbs outrank higher suburbs in many aspects, and have many important strengths that we can't measure. There are always trade-offs in people's choice of place. Alongside our state and local governments, the federal government's renewed interest in cities is welcome. However, as highlighted in Deloitte's recent report, The Purpose of Place: Reconsidered, prosperous places are not just the responsibility of governments. Rather, collaboration is key, and business, community groups and individuals also have an important role to play, as well as much to gain. Melburnians need to embrace change. Being regarded the world's most liveable city is a prize we should celebrate, but in the knowledge that there is still so much more to do. There is room for optimism that our young and successful city can prosper in a globalising and disrupted world. Good design can alleviate some of the negatives of development, and business will innovate and help tackle the challenges of compact urban living. Sharing our prized liveability should be a point of pride, not fear. There is no such thing as a "full" city. Higher density doesn't threaten liveability. Rather, it can be a precondition for it.

Let's bring down this new city wall. Daniel Terrill is a director of Deloitte Access Economics. Adam Terrill is senior principal town planner at Tract Consultants.