A former university campus in Melbourne's inner east will be transformed into a 350-home "boutique" apartment complex, as new figures suggest the state's planning permit backlog is easing.

The Hamton development of the University of Melbourne's Hawthorn land, which is expected to begin construction next year and open in 2027, includes six buildings up to seven storeys high, while almost doubling the site's tree canopy.

The development plan has been approved by the Allan Government, which wants 800,000 new homes built in the next decade, including many near existing services.

"This is exactly the sort of site that we need, to see more homes being built more quickly," she said.

"We're working hard to clear the pathway for more approvals to be made so more homes can be built, and finally we're working on making sure that there's a great mix of homes coming into the market for more Victorians."

Ms Allan said since the government overhauled approvals late last year, 60 per cent of permits that had languished with councils for more than six months have been cleared.

That represent 2826 dwellings.

The news comes amid concerns labour and supply shortages, as well as delays related to cultural heritage, threaten to slam the brakes on the state's housing plan. Signs a permit backlog was being tackled were described as a "promising" first step to creating more housing by the Property Council of Victoria.

The Hawthorn land was sold to Hamton by the University of Melbourne last year, subject to being rezoned from public use to residential growth zone. The rezoning allows for 1.6ha "luxury residential" development with 350 apartment built across six buildings that are between three and seven storeys.

It includes 10 per cent of the homes to be "affordable" for moderate income earners, while the university's land sale proceeds will go towards its new $650m Australian Institute for Infectious Disease in Parkville.

Hamton founder and executive chairman, Paul Hameister, said the approval paved the way for "the delivery of meaningful new housing supply in the popular inner east of Melbourne".

Mr Hameister said Charter Keck Cramer research commissioned by Hamton showed development opportunities of scale in the area are almost non-existent but "Demand for high-quality residences continues to outstrip supply".

He said the company wanted the development "to create a global exemplar of gentle medium density housing" with mid-rise building among lush green parks.

This meant the majority of 100 existing trees - of which only four were assessed as significant and would require keeping - would be retained and an additional 100 would be planted.

Planning Minister Sonya Kilkenny said the government was "using every lever at our disposal" to turbocharge the housing industry. Since the government overhauled the state's permit approvals process late last year, it is said more than 800 to 1400 residential developments that had sat with councils for more than six months have now progressed to the planning stage.

Property Council Victorian Executive Director Cath Evans said the achievement was promising, amid recent concerns that labour and supply shortages and delays related to cultural heritage were threatening to stall the state's ambitious housing plan.

"Delays in the planning pipeline obviously hold up the delivery of new homes for Victorians, but developers are also often forced to pass on to consumers the substantial holding costs incurred through these inefficiencies," Ms Evans said.

"Intervention in planning approvals for projects that have become stuck in the pipeline is the first step in ensuring Victoria has a planning system up to the task of delivering 80,000 homes per year over the next decade."

Article by Matt Johnston and Carly Douglas for Herald Sun.