Growth and development  are forcing difficult choices about the future of Daylesford. Recent controversies about the scale of new housing developments, plans for large liquor supermarkets and concerns about weekend congestion all highlight the challenge.

Increased demand has already made it difficult for young people and families to break into the local housing market.  Prices have skyrocketed by more than 50 percent since before the pandemic.

There are currently about 70 houses for sale in the Daylesford postcode. None are asking less than half a million dollars. Half are asking more than a million.

Mortgage rates are around 6-7 percent with monthly repayments of around $36,000 a year on a half a million dollar home loan. Lower income households cannot afford that cost.

Fifty percent of households have incomes of less than $100,000 per year. Lower income households are in ‘housing stress’ when they spend more than 30 percent of their total income on housing. To manage a half a million dollar loan comfortably requires an annual household income of around $120,000, plus the initial $50,000 deposit.

As a proportion of average incomes, the average cost of buying a house has gone up from from 3-4 times average incomes to 7-8 times  over the past two decades.

Prices have gone up because we don’t build enough houses. Supply hasn’t kept pace with population growth. As the gap between supply and demand increases prices go up.

Governments have failed to build enough public housing and allowed a litany of perverse incentives to undermine a rational housing policy to provide enough affordable housing to meet community need.

This includes planning and regulation that lead to expensive and poor quality development, taxation policies including negative gearing and capital gains tax that encourage speculative rather than long term investment and high transaction costs  for buying and selling houses, including stamp duty.

Locally, the cost of buying a house in Daylesford is beyond the reach of workers in industries like hospitality, health care and community services.

The alternative is to rent. But good luck finding rental properties. Only around 15 properties are available for long term rental in the Daylesford area currently. Their average cost is about $23o a bedroom per week.

Long term rentals have to compete with the more lucrative short term accommodation market.

Airbnb lists about 400 houses on the short term rental market locally with average prices in the $300-400 a bedroom per night range.

Even allowing for property management, laundry and cleaning, 100 nights a year of short term rentals is much more profitable than full time rental. Plus the property remains available for occasional personal use for holidays or family visits.

Housing costs are high and long term rentals are in short supply because Daylesford is a highly desirable destination both for visitor accommodation and life style choice.

As ordinary workers are priced out of the Daylesford market, maintaining a committed high quality workforce for local business and services will be more difficult. Workers are increasingly likely to live elsewhere and commute to Daylesford from areas like Ballarat and Kyneton. As a result it will be harder to get workers and they will be more transient, with less knowledge of, and commitment to the local community – a particular problem for human services such as aged care.

The high cost of housing and renting locally is unlikely to improve any time soon. Although the local property market has softened recently as interest rates have gone up, the medium to longer term trend is for increased demand and higher prices.

Daylesford’s beauty, history, heritage and lifestyle opportunities make it a highly desirable destination for visitors and those looking for a change from urban environments.

The local area is within a two hour trip to Melbourne, Ballarat and Bendigo and the new trend to flexible working is likely to see increased interest from higher income professionals who want relocate to Daylesford from larger centres. Investors and those looking for lifestyle change will continue to be attracted.

Apart from increasing the price of housing and rental accommodation, growth puts pressure on education, health, aged care and community services. It can lead to transport and visitor congestion and potentially threatens local character and amenity.

The Council is in the process of developing a structure plan meant to tackle these issues. Structure plans define a Council’s preferred direction for future growth and how it will be managed. These plans define precincts and boundaries for residential and business areas. They provide for different types of residential development,  commercial use, public space and transport.

Structure planning should lead to the development of a detailed implementation program of statutory and strategic initiatives, including the production of a Statutory Framework that sets the rules for future development in the Council planning scheme.

So far a couple of hundred people have had their say. Not surprisingly protection of the local environment and heritage, developing more affordable housing and getting better transport connections have been identified as priorities.

It will be more of a challenge to balance the need for affordable housing for workers and families with economic development, heavily driven by tourism and lifestyle change, while at the same time retaining the character of the town people value.

Amongst other things that means considering a raft of difficult questions including:

  • the proportion and distribution of short term rental properties that should be permitted locally,
  • the density and types of housing that should be available
  • the types and extent of commercial activity
  • requirements for developers to include social and affordable housing and public space and amenities
  • the extent to which the supply of land for development should increased and the conditions for future development.

Inevitably, there will be very different community views about how these, and a number of other issues, should be resolved. The negotiation of an effective Structure Plan for the future will be critical.

Council intends to release research and technical studies to shape the Structure Plan early in 2024 for public comment. How the community responds, remains to be seen. The final plan is due for release in mid 2024.