Bendigo's council housing gamble: how one regional city is trying to beat the global affordability crisis

Bendigo City Council has approved a $47 million program to build 142 new social and affordable homes directly on council-owned land, a move that sets it apart from most Australian local governments and aligns it with a small but growing group of municipalities worldwide that have abandoned the reliance on private developers alone.

The local gamble

The decision, passed 7-2 at the June 24 council meeting, commits the city to constructing homes on three sites: the former Diggers Rest caravan park on Lily Street, a vacant block behind the Bendigo Library on Hargreaves Street, and a 2.3-hectare parcel near the La Trobe University regional campus on Edwards Road. Council officers estimate the average cost per dwelling at $331,000-about 28 percent below the median Bendigo house price of $462,000, according to CoreLogic data from May 2026.

It's a sharp departure from the typical Australian council model, where local governments zone land and collect rates while private builders and state housing authorities handle construction. Instead, Bendigo is acting as its own developer, borrowing $34 million through the Treasury Corporation of Victoria and using $13 million in federal Housing Australia Future Fund grants to cover the rest.

Mayor Cr Andrea Metcalf told the chamber the approach was necessary after private sector proposals for affordable housing on council land failed to deliver a single tenancy in four years. “We can't wait for the market to solve this,” she said. Councillors opposing the plan warned of financial risk to ratepayers if construction costs rise or rental income falls short of projections.

How does Bendigo compare globally?

Vienna, often cited as the gold standard for municipal housing, has built and managed council-owned apartments for more than a century; about 60 percent of Vienna's 1.9 million residents live in some form of subsidised housing, much of it directly constructed by the city. In Canada, the City of Vancouver launched a “direct delivery” affordable housing pilot in 2023, completing 86 units on a city-owned parking lot in the Mount Pleasant neighbourhood at a cost of $42 million CAD. Ottawa followed with a 200-unit project on Albert Street in 2025.

Bendigo's program is small by those standards-Vancouver's 2025 budget allocated $205 million CAD for municipal housing-but it's large for a Victorian regional city of 120,000. The Victorian Auditor-General's Office reported in October 2025 that only three of 79 local councils in the state had completed any direct-build housing projects since 2020. Bendigo's 142 units would more than double the total of all such projects combined.

New Zealand's Tauranga City Council, a city of similar size to Bendigo, has taken an even bolder approach. In 2024 it began building 300 homes on a former golf course in Tauriko West, using a mix of council debt and government subsidies. That project has been delayed by six months after foundation work hit unexpected volcanic rock, underscoring the risks Bendigo's opponents flagged.

What happens next

Construction on the Lily Street site, which will yield 48 one-bedroom units for older women experiencing homelessness, is scheduled to start in February 2027. The Edwards Road site, with 60 units aimed at La Trobe University students and low-income workers, will follow in August 2027. The Hargreaves Street lot, earmarked for 34 family-sized two-bedroom apartments, is set for tender release in November 2026.

Council staff will report back to the chamber every six months with actual cost data, rental income figures and occupancy rates. If the first 50 units lease within three months at rents set at 30 percent of local median income-currently about $275 per week for a one-bedroom-the council has indicated it will consider a second phase on land it owns near the Bendigo Health campus on Barnard Street.

For residents watching from the public gallery on June 24, the debate came down to a single question: whether a city that has seen its median rent jump 22 percent since 2021 can afford not to try. The first concrete will be poured on Lily Street in nine months.