A housing development application for 14 unit-styled semidetached dwellings has been denied in a unanimous vote by the City of Greater Bendigo council.

The California Gully application, which has 12 three bedrooms and two featuring two bedrooms, was knocked back for several reasons, with councillors citing maintaining "neighbourhood character" as a major concern.

Most of the proposed properties were designed to share a wall, unlike the freestanding houses on the street.

City of Bendigo councillor Dave Fagg said there had been previous development applications for the lot of land at 25 Alliance Avenue and 26-28 Youlden Street in 2010 and 2014, along with a permit for six dwellings that had expired.

Mr Fagg said it was disappointing to see the application had been recommended for refusal. However, he agreed with the council officers' decision.

"The reason for my disappointment is the city needs smaller housing developments of this kind which can fill in vacant lots of land with unit housing that can house Bendigo's growing population," he said. 

"However, I think we can chew gum and walk at the same time. we can create infill housing while maintaining neighbourhood character."

Need for suitable affordable housing

City of Bendigo Mayor Andrea Metcalf said the application was also knocked back due to additional concerns about amenity, some of the houses being semidetached and insufficient visitor car park.

Throughout the ordinary council meeting, councillors spoke about the urgent need for additional affordable housing options for the city.

"Because we do need to have housing that is two-bedroom units; because we know that we do have a lot of households that have just got one or two people living in [a two-bedroom] house.

"That was another reason why it was refused too. It didn't provide a greater variation of housing offering to our community."

Council documents also revealed soil testing assessment found arsenic concentrations across parts of the site exceeded the residential threshold, which can be attributed to historical mining in the area.

However, the assessment concluded the site was suitable for unrestricted residential use in its current condition, subject to recommendations.

Housing crisis still a great concern

Housing support provider Haven Home Safe says 1,865 Central Victorians had accessed emergency accommodation in the past year.

With rental prices going up across the Greater Bendigo region and funding for housing support going down after COVID relief funding ends, support services manager Donna Gillard fears without additional affordable housing soon, the housing crisis will worsen.

"We're always going to have people experiencing homelessness for various reasons," she said.

"We're now experiencing higher costs for rental accommodation, and it's just it's unaffordable for us.