Regional towns consider high-rise plans to ease housing crisis in the bush and on the coast

The Bega Valley Shire Council is considering a development application for a 52-unit apartment complex in Merimbula. (Supplied: Spungrow Development)

In a small coastal town popular with foodies and sea-changers, locals are grappling with a tall question that could change the character of their growing hamlet: how high is too high?

The local council is in the final stages of considering proposals for three, five-storey apartment buildings on a block of land in the heart of Merimbula, on the New South Wales South Coast.

It is also examining a proposal to build a seven-storey, 100-room hotel and conference facility in the town.

Similar applications in Merimbula have been rejected in recent years after a backlash from a community that’s used to single-storey blocks with big backyards, and one that has so far been left “untouched” by big development.

But the pandemic-induced sea-change is causing growing pains.

Across regional Australia, populations have increased by an average of 12 per cent on pre-COVID levels, and they’re squeezing an already tight housing market.

Median house prices have risen by a “staggering” 54 per cent in three years, according to the Regional Australia Institute (RAI), and the rental vacancy rate is at a near-record low of 1.2 per cent.

In Merimbula — a six-hour drive from Sydney — the median house price has surged to $1,025,000, according to local real estate agents. Rental properties, listed for about $600 a week, are being snapped up as soon as they’re advertised.

It’s why the Bega Valley Shire Council is giving serious thought to raising the building height limit in the town to accommodate new developments that could help to alleviate the region’s housing shortage.

Pendulum swings back towards regions

Analysis by the RAI has found apartments make up just 2 to 3 per cent of the total housing stock in some regional markets, compared to more than 42 per cent in metro areas.

Master Builders Association chief executive Denita Wawn said with so many younger Australians moving away from capital cities, regional towns needed to have a conversation about embracing “medium density and small high-rise” developments.

“If we’re getting young professionals coming into these centres, they don’t want a detached house with a large garden,” she told the RAI’s recent housing summit.

“It’s an important conversation about going up.”

In the heart of western NSW, that conversation is well underway.

Dubbo’s council has approved its first high-rise development — three apartment blocks, of up to 15-storeys.

While such a development is unusual for a big, inland city, many of the 80 units have been sold off the plan, demonstrating the level of demand for  accommodation in the community.

Rough sleepers a problem for the first time

After the urbanisation of the 1950s, RAI chief executive officer Liz Ritchie believes the pendulum is swinging back the other way, as mainly millennial city-dwellers search for a more affordable lifestyle.

“We’re facing a societal shift,” Ms Ritchie told the summit.

“Five years ago, there were plenty of houses in regional Australia and here we are today in a very constrained market.”

She says the “staggering” increase in house prices has had a flow-on effect, pushing locals out of the property market and into tents, cars, caravans and temporary accommodation.

Most regional councils are contending with rough sleepers for the first time, according to Australian Local Government Association head Linda Scott, who described it as a “dramatic change” in a short period of time.

“There are very few places in Australia that don’t speak to me about either having rough sleepers in their towns and villages for the first time — or in recent memory — or knowing that there are families and people on the precipice of rough sleeping on their towns and cities,” Ms Scott said.

The Member for the Victorian seat of Indi, Helen Haines, put it bluntly: “We have run out of places for people to live.

“For decades successive governments have said, ‘Build it and they will come’.

“Well, they’ve come, and we haven’t built it.”

‘It’s bureaucracy gone mad’

Depending on who you talk to, the reasons for this housing crisis are obvious: developers accuse councils of taking too long to consider development applications and, in turn, councils often blame restrictive state government planning rules.

And that’s before you consider the fact that construction costs have risen by 40 per cent on pre-COVID levels, according to the Master Builders Association.

As his council considers whether “small” high-rise is the answer in Merimbula, Bega Valley Shire Mayor Russell Fitzpatrick insists the local government is trying to address the region’s housing shortage.

He points to a council proposal that’s been sitting on the NSW Planning Department’s desk since December 2022 for a 300-lot subdivision in the small village of Wolomla – about 15 kilometres west of Merimbula.

“We’ve got a fair bit of land available but it’s horrendous trying to get blocks of land released,” he said, blaming a mix of community pushback, biodiversity laws and state planning rules.

“I believe in good planning but it’s bureaucracy gone mad sometimes,” he said.

While the reasons for the housing shortage are many and varied, all experts agree that the answer is more supply.

To that end, the RAI is demanding the federal government help solve the problem by allocating 40 per cent of its Housing Australia Future Fund (HAFF) to the regions, to boost supplies of social and affordable housing.

“If we look at the 1.2 million homes to be built in the next five years, we need around 450,000 of those located in the right places in regional Australia,” Ms Ritchie said.

“While it is still more affordable to buy in the regions, for now, there is no third option if locals or metro-movers are priced out of the market, and supply fails to meet demand.”