Say goodbye to the Great Australian Dream. Hills Hoists spinning in a suburban breeze no longer speak to our collective unconscious.

When Melbourne won The Economist award for World's Most Livable City last August, it wasn't the isolating suburban sprawl that secured it the accolade for the sixth year running. The city's savvy revival of its inner precincts is creating vibrant new communities, living in close proximity. High-density urban living is becoming the 21st century dream.

As a result, savvy architects who once focused on large houses are turning their attention to small apartment developments – award-winning Melbourne architect Clare Cousins among them. Her most recent project: the interior architecture of Neometro's Jewell Station buildings, in Brunswick.

"We took a lot of our experience gained from designing single-family homes and applied that knowledge to apartment living," Cousins says.

Despite their relatively small footprints of 45 to 95 square metres, the one-to-three-bedroom apartments at Jewell feel airy and spacious. That's partly a result of the architect's insistence on tall windows to accentuate ceiling height. It's also because she has cleverly extended timber floors seamlessly from living rooms and bedrooms through to terraces, allowing the interior to segue harmoniously to the exterior balconies and beyond.

"We put ourselves in the future occupants' place and that allowed us to consider the interiors as living, breathing spaces," she says. Timber, she points out, "has an enormous emotional impact on people" so it is used unsparingly throughout.

"Unlike Sydney, where the wild topography creates interesting variations in the architecture, in Melbourne we work to horizontal planes, so we like to celebrate surfaces."

And then there's the boring stuff that in fact makes the world of difference. Like extra tall and deep bathroom cabinets roomy enough to store a hairdryer. And mirrored kitchen splashbacks that reflect the greenery outside. Each apartment has a study nook facing a window. These are small details, maybe, but make a big impact in terms of pleasurable living.

Cousins' house designs exude a quiet majesty. Her Rail House, backing onto a train track is a concrete block bunker, closed off to the street except when night lights puncture its facade. The Wallington House near Ocean Grove on the Bellarine Peninsula is a semi-submerged, stone-clad structure with a gently inclined metal roof. Monocle magazine called it "elegant and enduring".

"There's no frou-frou to Clare's work," says Jeff Provan, design director of Neometro, the developers behind the Jewell Station precinct. "What interested us for Jewell was that she is great at maximising the efficiency of small spaces and she effortlessly meets our criteria of longevity and livability."

Neometro is a certified B Corporation, a qualification certificate based on sustainable and ethical production. It's like the Fair Trade classification coffee producers strive for.

The company is also the granddaddy of a new breed of Melbourne property developers that includes Assemble, Milieu and Small Giants, each of which is focused on creating not just buildings but sustainable, ethical, ecologically sound neighbourhoods.

Founded in 1985 by Provan, the scion of a family of builders, and his friend Barry Ludlow, Neometro's first projects were a series of warehouse conversions in Carlton and Richmond. The following year they were named the New Innovator in the Dulux Colour Competition.

"We were just a couple of guys doing all the labour and running around," Provan says. "We weren't tradies, but after that people started to ask us to do stuff for them."

And so Neometro grew from the ground up, eventually coalescing into an integrated property development and architectural firm specialising in what Wallpaper* magazine calls "exemplars of mixed-use development".

Provan and his partners Neil McLennan and James Tutton  believe in what they call high-density happiness, developed upon the findings of a study commissioned by the National Heart Foundation of Australia. This research concluded that higher-density housing, when carefully considered, has the potential to improve the physical and mental health of residents, with great flow-on benefits to the community and the environment.

For Neometro, good design contributes to physical, emotional and environmental health, supporting resilient and sustainable cities.

"I was excited to get to work with Neometro on Jewell," says Cousins. "They're highly respected, and leaders in the field."

The two Jewell medium-rise towers are all angular juts and oblique terraces, intriguing to the eye and an asset to the cityscape. A mixed material palette of concrete, brick and timber creates textural intrigue.

"The building's relatively narrow," says Cousins, "which means cross-ventilation keeps it cool in summer, reducing electricity costs". Double glazing retains heat in winter. The rooftop is planted with edibles, a gathering place for residents to interact.

The focal point of Jewell is the red-brick Victorian railway station of the same name, which opened in 1884. VicTrack sold off the adjacent land to Neometro for development and, in return, VicTrack has earmarked a portion of the profits from the sale of its Jewell apartments to help fund VicTrack's improvement to the heritage station forecourt and public domain. This will include communal vegetable gardens planted by urban garden specialists 3000acres.

"We're all about unlocking unused land belonging to public utilities and putting it to use for local communities," says Ellie Blackwood, 3000acres gardens officer at Jewell station. Their goal is "to see more people grow more food in more places".

In fact, beyond the excellence of the Jewell apartments themselves, it's the manner in which Neometro and VicTrack have given life to this new neighbourhood that makes the development so attractive.

"The VicTrack team has shown unwavering commitment to the collaboration process," says Provan. "We're all focused on achieving best-quality end product in terms of design, sustainability, place-making and community – over and above purely commercial interests. We passionately believe that business can be used as a force for good."

It's this kind of nuanced symbiosis that is creating a new urban ecology, ensuring Melbourne the top spot on The Economist's score card, just above Vienna, Vancouver and Toronto. And not a Hills Hoist in sight.