To combat this, the state government has contributed $2 million to unlock housing in Timboon and Simpson; two key towns in the Great Ocean Road hinterland.

On Tuesday night the Corangamite Shire council voted to act as the developer of up to 40 houses on council-owned land in Timboon, while in Simpson it will seek a development partner to build up to 100 new houses on privately-owned land.

"One of the main reasons we are even considering this type of development as a local government is because of the incredible demand for housing, not only in our shire but throughout the whole region," councillor Jamie Vogels said.

"We also know that while the price of land and housing has skyrocketed during COVID-19 there are still some market barriers or market failures where developers are not prepared to invest in small towns."

The Great South Coast and Barwon region plays host to a number of key agricultural industries including food, fibre and the energy and renewables industries.

Around 4000 workers in the region live outside it due to the lack of housing.

A further 2610 jobs are projected to be created within the region by 2024, which will "significantly add to the demand for housing" within the region over the coming four years, Cr Kate Makin said.

If even 30 per cent of these projected workers wanted to live in the region, that would represent the need for an extra 2000 dwellings, and if that figure were 50 per cent then a further 3500 dwellings would be required.

If workers can live in the region, the economic benefit to the region would be between $396 to $596 million and it would create an additional 615 to 923 jobs in the population.

"Clearly we have a responsibility to do something about it," Cr Geraldine Conheady said.

In coastal areas the housing stock is dominated by owners of holiday homes and investors in the short-stay accommodation market.

In other locations across the region, housing development is very low due to the small size of local housing markets and other development constraints.

In addition, an ageing community across the region is facing barriers in the move into more suitable accommodation both economic - it costs more to move to a new house than stay in an existing one or any uplift disappears with stamp duty - and lack of alternate housing being available.

There is growing demand for older residents to 'age in place'.

The combined effect is a significant shortage in housing for key workers and potential residents to rent or buy across the region.

A residential land review for Camperdown, Cobden and Terang, rural living strategy and key worker housing plan shows the shortage of supply has compounded inflation in the local property market.

The situation is the same for Timboon and Simpson.

The Great Ocean Road is one of Australia's leading iconic tourism destinations.

Before the coronavirus pandemic hit, the Twelve Apostles attracted around two million visitors per year.

Tourism forecasts estimate total visitation to the region will grow by around four per cent per year to reach 8.6 million travelers by 2026.

The Visitor and Accommodation Forecast Great Ocean Road, prepared in 2018 for the Department of Environment Land Water and Planning, estimates 5.6 million day trip visitors and three million overnight visitors in the next five years.

Developments in the region have historically focused on the areas along the route of the Great Ocean Road, including the scenic Otway Ranges to the coastline and coastal towns.

However the council is looking inwards towards the hinterland; growth along the coast has highlighted its limited capacity to sustain growth and development along the dynamic and fragile coastline.

The Great Ocean Road and Environs Protection Act 2020 and GOR Action Plan also recognise the land and towns between the coast and Princes Highway to the north - 'the hinterland' - will play a key future role in the region.

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