Addressing the gaps in regional housing

The Legislative Assembly Environment and Planning Committee heard from a number of witnesses about the complex challenges impacting the state’s regional housing supply.

Close to 25 per cent of Victorian residents live in regional areas and that number is growing annually.

Head of State Planning at the Department of Transport and Planning Colleen Peterson said 90 per cent of all dwellings in regional Victoria were detached separate dwellings and that was an issue for both housing supply and affordability.

Recent changes to planning provisions include the creation of the townhouse and low-rise code, designed to support faster decisions and a pathway for townhouse and apartment style development up to three storeys in height.

‘We really hope to see that regional developers will be able to take advantage of those provisions to provide more diverse forms of housing in regional towns, where the building of even just two and three units on a block rather than a single home will create more affordable, more diverse housing,’ Ms Peterson said.

Australian Housing and Urban Research Institute Managing Director Dr Michael Fotheringham agreed that regional Victoria needed to diversify the types of homes available to meet community needs.

‘We need to think about what type of housing we are building for what are largely small households,’ he said.

‘One hundred years ago we had 4½ people per household … Things have changed, and people’s appetites have changed. We have got people moving from all over the world into Victoria. Many of them are coming from places where apartment living is absolutely the norm.’

Dr Fotheringham encouraged the Committee to seriously consider the role of offsite construction in addressing housing supply in regional Victoria.  

‘One of the challenges we have for private development of housing is the feasibility of apartments of higher density. It is very challenging. The costs are very high. That is not something that is easy to overcome.’ he said.

‘We are pretty outdated in the way that we build houses in this country. We are lagging behind most of the world in terms of offsite construction.’

Victoria Planning Authority Acting CEO Dean Rochfort noted that growth in Modern Methods of Construction (MMC) was a key area of focus for the government, with the Victorian 2024/25 state budget providing funding under the building reform program to promote MMC.

‘MMC, including prefabricated, offsite and modular construction, differs from traditional forms of onsite construction. The increased availability of MMC may deliver a range of benefits to both the industry and residents of Victoria, including rapid development of new homes, greater quality control through factory-controlled settings and enhanced design flexibility and a reduction in emissions during the construction process,’ he said.

Another key challenge raised during the hearing was skill shortages in regional Victoria.

Housing Industry Association Executive Director for Victoria Keith Ryan said regional Victoria was experiencing a shortage of trades, builders and support professionals, such as building surveyors and engineers.

Mr Ryan told the Committee that changing government regulations and laws were directly contributing to the shortage.

‘Our members are finding it very tough at the moment to operate. They are facing very difficult financial conditions but also a lack of consumer confidence,’ he said.

‘They are also finding it, though, very hard to keep their businesses going as they deal with an increasing burden of government regulation through changes to national construction codes, tightening regulation, and we are noticing a decline in the number of builders who are actively working in the industry.’

Planning Institute of Australia Victorian State President Patrick Fensham said access to key worker housing was also adding to the workforce challenges in regional Victoria.  

‘We have got to a point where even if we have got all these settings right ... we have still got a structural problem in actually providing affordable housing for the workforce, for people who need it. ’ he said.

Mr Fensham indicated that extending support for key worker housing was needed, with interventions required in this space.

To find out more about the inquiry, visit the Committee's website.