Hepburn Shire Council voted at a meeting last week to take the first steps in establishing a plan to address the growing issue of an affordable housing shortage.

Cr Kate Redwood moved the motion for council officers to secure grant funding to develop an Affordable Housing Policy.

"Given the cost of real estate in this shire and given what we know about being a shire with a lot of people with low income who find it very difficult to access housing, having a policy of this kind is very very important," she said during the meeting.

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Cr Fiona Robson seconded the motion and said safe and affordable housing was linked to people's health, well-being and participation in community.

"Having a policy is really the first part of quite a bit of work required to actually get affordable housing available to people," she said.

Hepburn Shire currently has no defined policy or strategy on affordable housing. Each individual council across the state can determine the ways and extent it wants to facilitate the provision of affordable housing.

An officer's report to council outlines potential council action, including advocacy to state and federal government for funding of affordable housing and encouragement of developments in the affordable housing sector through the waiving or reduction of rates.

Other options are to make a planning scheme amendment that allows negotiations with developers to include affordable housing and providing free or discounted council land to affordable housing developers.

Daylesford resident and member of community group Safe Place said he was delighted the council voted to see an affordable housing policy prepared. The group made a submission to council advocating for the development of such a policy earlier this year.

"We studied other council's policies and found many had good ideas," he said.

"For example, there is a thing called inclusionary zoning, which is a term for when a developer comes along and says I want to build 40 hours on this site, the council negotiates with them and says you can have that, but you must allocate five to 10 per cent to affordable housing. Those are the kinds of things the council can do and other councils are doing that don't cost a fortune to ratepayers."

Safe Place has been liaising with council to identify land in Hepburn Shire appropriate for affordable housing development and is currently working on plans for one possible location with an affordable housing developer.

It is understood affordable housing is limited in Hepburn Shire due to high property values and high use of housing for tourist accommodation.

In a parliamentary inquiry submission, Mr Hall referenced an unemployed single mother with children renting a home in Daylesford for $350 a week, well over the considered affordable limit of 30 per cent of her income.