Melbourne was selected as the host city of the XVI Olympiad over bids from Buenos Aires, Mexico City and six American cities at the 43rd Session of the International Olympic Committee on 28 April 1949 in Rome, Italy. Many members of the IOC were unsure about Melbourne as an Olympic venue. Its position in the southern hemisphere meant that the Games would take place during the northern winter, a time when most northern athletes are resting. Eventually Melbourne was elected to host the Games by a one-vote margin.
The preparations for the Games were fraught with problems, which started with the discovery that Australian quarantine regulations would prevent the equestrian events from being held in the country. Stockholm was selected as the alternative venue for the equestrian competition, which began on 10 June 1956, nearly six months before the main Games began.
Financial issues also put the Melbourne Games in danger. Due to a housing shortage, the Premier of the State of Victoria refused to allocate money for the Olympic Village, which was eventually built in the city of Heidelberg West. The Prime Minister of Australia also refused the use of federal funds for the Games. The situation eventually caused the President of the International Olympic Committee, Avery Brundage, to suggest that Rome, host city for the 1960 Games, was so far ahead of Melbourne with its preparations that it may be chosen as a replacement venue. As late as April 1955 the IOC was still preparing to grant the Games to Rome, as construction of the Melbourne venues was still behind schedule. However, by the beginning of 1956 it became clear that Melbourne would be ready to host the Games after all.