Yarra City Council will pause its search for a development partner for the proposed affordable housing project next to Collingwood Town Hall, following a market process that highlighted the funding challenges facing projects of this kind.
The project – first proposed to provide at least 50 affordable rental homes for local key workers – has faced a significant hurdle in that the current funding model doesn’t yet add up for developers or community housing providers to deliver it.
Strong interest, but a funding gap
Council’s Expression of Interest process, run earlier this year, drew solid interest from the housing sector – 62 organisations registered to review the opportunity, and 24 attended an online briefing. But when it came to firm proposals, the evaluation found no respondent could deliver the project within Council’s parameters, which required at least 50 below-market-rent homes without Council providing capital or ongoing funding.
Yarra City Council Mayor, Cr Stephen Jolly, said the process has given Council valuable, real-world evidence about what it takes to deliver affordable housing in the current market.
“It’s not a case of the appetite not being there, the sector clearly wants to build these homes. It’s that the funding settings, as they stand, make it very difficult.”
What happens next
Council has determined that the current search be wound up for now, with all participating organisations to be notified. Importantly, the site itself isn’t going anywhere, and the project isn’t being abandoned. It remains a Council priority that could be revisited if funding or market conditions change.
In the meantime, Council will use the findings from this process to strengthen its case to state and federal governments for the capital and policy support needed to make affordable housing projects like this one viable.
