Rural Councils Victoria
Rural areas in Victoria are facing significant housing shortages, particularly in rental accommodations for skilled, unskilled, and seasonal workers, slowing down economic development.
In response, SGS Economics and Planning, in collaboration with Rural Councils Victoria (RCV), has compiled evidence to advocate for policy reform and investment to boost housing supply in rural Victoria.
Before the COVID-19 pandemic, RCV research highlighted challenges in the private rental market, affecting population growth and economic development in rural areas. The pandemic and subsequent government stimulus packages have exacerbated housing supply shortages, resulting in increased demand and housing prices in regional and rural Victoria.
The scope of the investigation covers four key components:
- An overall housing supply and demand profile in different parts of rural Victoria and an appraisal of the external forces shaping these trends.
- An assessment of the mechanics and realities of housing supply in rural Victoria, covering identifying the types of companies active in housing investment, the basic economics of housing projects in these areas and the impact of regulations and taxes on housing production.
- A synthesis of market outcomes in rural Victoria, including appropriateness and affordability of housing supply, with commentary on the problems attached to this, for example, difficulties in sourcing skills or accommodating longer-term community members as they seek to age in place, and
- Development of a reform and intervention agenda to improve housing outcomes in rural Victoria.
Key findings
Significant new housing investment is required to support economic development and meet the needs of an aging population. An estimated 87,400 additional dwellings are needed in rural Victoria over the next 15 years. However, rural housing markets face limited developer incentives, land withholding, and a lack of multi-unit developments. Financial and staffing limitations hinder timely strategic planning and rezoning. Without addressing these housing shortages, the RCV region could forgo $200 million to $1 billion in Gross Regional Product (GRP), equating to 0.5-2.7% of the total regional GRP.
Recommendations
To address market failures in housing supply, it is recommended that RCV collaborate with the Victorian Planning Authority for strategic land supply and infrastructure planning, support access to infrastructure investment facilities to enhance local housing development, advocate for recurrent subsidy programs to aid councils in accessing infrastructure funds and utilise mandated government programs like Victoria’s Big Housing Build.
Regarding taxes, charges, and regulations, RCV should advocate for a revenue-sharing deal to return a proportionate share of state collections to rural communities for housing supply assistance. For affordable housing for the workforce, RCV should press for a state commitment to a Rural Worker Housing program, providing recurrent payments for building and operating rental housing to address skill shortages and encourage consultations and assessments to determine the best delivery models for the program.
This comprehensive analysis and set of recommendations aim to bolster housing supply, support economic development, and improve the quality of life in rural Victoria.
