Cr Jacinta Ermacora told her colleagues this week she was worried by delays in implementing an affordable housing policy which was flagged in the council's 2008-12 plan.

"I don't want our city to become an elite city," she said.

"Housing is becoming more expensive in Warrnambool and we still don't have a working strategy."

She said $15,000 had been set aside back in the 2008-09 budget and transferred to the current budget to prepare the strategy, but little had progressed except the transfer of public housing properties from the council to Loddon Mallee Housing Co-operative ownership late last year.

Mayor Cr Michael Neoh said a shortage of student accommodation was also an issue.

Cr Ermacora said the housing shortage issue needed to be given a higher priority.

"Employers are not going to be able to attract staff because of the cost of housing if it keeps rising," she said.

"Council must take a lead on this.

"We need to figure out a model that will work. We may have to partner with innovative developers.

"If more people can afford to buy their first homes it will lower rents and enable more people to be able to afford rentals."

She said the average price for a new basic family house in Warrnambool was between $350,000 and $400,000 which was above the affordable level for first-home buyers.

City chief executive Bruce Anson said he would arrange for a report on where the strategy was at.