While development-opposing Not-In-My-BackYard mentality exists everywhere, the middle ring of suburbs in the Victorian capital - those between 5km and 20km from the city centre - have seen almost no growth in density over the past 30 years due to the efforts of anti-development lobby groups such as Save our Suburbs, the Grattan Institute think tank said last year.

But these suburbs have the existing transport, education and social infrastructure such as parks that makes them better able to accommodate higher numbers of people than new growth areas

To help ease concerns, the new rules will also require a minimum percentage of land developed in the specified residential zones to be set aside as garden, to preserve character of the existing area.

Another change will allow aged care facilities of up to three levels, rather than the two they are effectively restricted to.

"All the modelling we've done suggests you need 90-100 rooms to make a viable operation," said Paul Hameister of developer Hamton Group. "Ideally that's around 30 rooms on each level, across three levels. If you only do two levels the economics don't work."

The property industry welcomed the push for higher density.

"Part of what the Plan Melbourne refresh is doing is stressing the importance of people living near the services and jobs they have to access everyday," said Sally Capp, the Property Council of Australia's Victorian executive director.

"What we do know is if you think you are buying a house and land package in an outer area, it doesn't necessarily mean it's an affordable area to live in."


Danni Addison, the Urban Development Institute of Australia's Victorian head, agreed.

"It was a very blunt cap applied before," Ms Addison said. "It was a bit of a missed opportunity. But the key will be around the planning certainty and time, the risk it takes to get projects up and off the ground and houses to market."

Plan Melbourne's aspirational target to build the remaining 30 per cent of homes in new growth areas is less than the currently projected 35 per cent.

Mr Wynne, who last month approved a new suburb 30km north of Melbourne with space for 15,000 new homes, said the so-called precinct structure plans underpinning new land releases would give buyers clarity about infrastructure provision before they purchased.

John Stanley, a member of the ministerial committee that advised on revising Plan Melbourne, said more new homes should be in established suburbs.

"It probably ought to be in terms of population rather than dwelling numbers," Prof Stanley said. "I'm inclined to think 30 per cent of dwellings on the fringe is going to be more than 30 per cent of the population on the fringe. That makes me a little nervous."