What’s causing Warrnambool’s housing shortage?

Warrnambool’s housing shortage is making it harder for businesses to attract workers, pushing up rents and leaving people competing for a disproportionate pool of homes.

We have a problem: Council documents note the city’s current rental vacancy rate at 0.8 percent, compared to 4 percent across broader regional Victoria.

🗣️ “We’ve got one of the lowest rental rates across the state,” mayor Ben Blain told the Brolga last week. 

🗣️ “I think our average rental at the moment for a three-bedroom house is $550 or $600 a week.”

🗣️ “It is a challenge, especially when you look at our census data, we're at the lower end of wages, so it is a challenge across our city, housing for workers and affordable housing for people to be able to come here and live in Warrnambool.”

Why is Warrnambool short of housing? Council’s 2020 Social Housing Planning Project document identified several factors driving pressure on the city’s housing market, including population growth, an influx of workers for major projects, seasonal demand from short-stay accommodation and Warrnambool’s role as a regional service centre.

• The report also found the city’s private rental market had tightened, creating a “bottleneck” for people trying to move from transitional housing to more secure rental housing.

• In 2016, 31.6 percent of Warrnambool’s rental households were experiencing rental stress, while the report estimated an unmet need for 1,396 social housing dwellings. 

• The report forecasts Warrnambool's population to reach about 46,210 by 2036, requiring 2,810 more dwellings if current trends continue. 

What can be done? According to the Grattan Institute’s 2025 report More homes, better cities, planning reform is one of the key ways state and local governments can increase housing supply and bring down costs.

• While the report focuses on major cities, it notes its recommendations are also applicable to regional centres like Warrnambool.

• The report argues restrictive land-use planning controls are preventing homes from being built in areas where demand is high and recommends allowing more housing through reforms such as greater density and more streamlined development approvals.

• These changes, Grattan predicts, could increase housing construction in Australia by more than 67,000 homes a year, reducing house prices and rents by up to 12 percent after a decade.

What’s Warrnambool doing? Council recognised it had an opportunity to help by enabling the use of its own land for housing projects.

• The mayor said receiving a $3 to $4 million election pledge for sewerage, power and water costs could help to unlock other council-owned land at Harrington Road, the former livestock exchange buffer zone, to build another 50 homes after nearly two years of bureaucratic delays.

• An $18.9 million Salvation Army and Homes Victoria social housing development received the green light in May to build 14 two-bedroom and seven three-bedroom townhouses on Mortlake Road after three years in planning.

The latest challenge: The city’s housing crisis was again in focus last week as Warrnambool council discussed multiple housing projects, including the approval of a $5.69 million project to build key worker accommodation at Shipwreck Holiday Park.

• Councillors unanimously awarded the project’s construction contract to CraftFlex to build 15 self-contained dwellings with 32 bedrooms at the holiday park.

• The dwellings include three one-bedroom, seven two-bathroom and five three-bedroom units, with the council also awarding a separate $633,522 civil works contract to Duggan Civil.

What they said: Council chief executive Andrew Mason said the build was greenlit through a $5 million state government grant.

• Councillor Matt Walsh raised concerns about the process, questioning whether councillors were “getting ahead of [themselves]” by approving the tender without seeing the final site layouts.

Header image: Warrnambool City Council