Half a million new homes should be built in the regions to tackle rising rents and accommodate the migration boom.
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The Answering the Call for Regional Housing report by the Regional Australia Institute (RAI) has found a long-term decline in housing construction.
Australia's regions were approving more than 60,000 homes each year 25 years ago. This has shrunk by 21 per cent to a mere 48,570 in 2024, despite more than 115,000 people moving to a regional area that year.
Dire rental market
The report painted a bleak picture of the regional rental market.
Vacancy rates in regions have been "consistently tighter, and growth in asking rents has been consistently faster" than in capitals in recent years, the report found.
Regional rents rose 6.2 per cent in 2024, while capital city rents rose 4.3 per cent.
The most vulnerable members of the community face the ultimate consequences of shortfalls in rental and social housing, and this can be observed in rising rates of rough sleeping in regions.
- Regional Australia Institute
The report found a surge of regional Australians sleeping rough, with the 2025 number (1463 people) more than double the level in 2020 (578 people).
Key recommendations
The Australian Government's National Housing Accord sets a target to build 1.2 million new, "well-located homes over five years from mid-2024".
However, it lacks a regional sub-target, the report found, which risks the bulk of the housing being built in the capital cities.
NSW is the only state that has adopted a regional target (55,000).
Specifically, this target is for the areas outside of Greater Sydney, Illawarra-Shoalhaven, Central Coast, Lower Hunter and Greater Newcastle.
RAI wants 40 per cent of the 1.2 million homes (480,000 homes) to be built in regional communities and dedicated regional housing funding tranches to boost supply.
RAI chief executive Liz Ritchie told ACM that regional Australia faced "unique challenges" such as high building costs, worker shortages, lack of industrial scale and the dominance of detached housing.
"Addressing these issues will require a suite of dedicated responses tailored to each community's needs," she said.
"It's encouraging to see certain towns and regional centres addressing their specific communities' needs."
In Winchelsea in Victoria, several townhouses have been built specifically for senior living, while in Griffith, New South Wales, the council and community housing provider have developed a mix of townhouses for key essential workers.
- Liz Ritchie
Ms Ritchie said new methods of construction needed to be embraced.
"There isn't enough workforce in many regional areas to build the number of homes that's needed to meet demand," she said.
"This is where we need to see local councils work with industry to adopt modern methods of construction, like prefabricated housing.
"These homes can be delivered quickly and at a relatively low cost."
Drouin West Timber and Truss is a prefabricated housing manufacturer based in regional Victoria.
Managing director Peter Ward told ACM that prefabrication in housing could make a "significant contribution" to the housing crisis.
"Traditional methods can take nine months; using our system, the time is cut in half (four to five months)," he said.
"Through this system, we have the potential to build twice as many homes in any given time frame with the same limited resources."
Carla Mascarenhas
Carla Mascarenhas is the NSW correspondent covering breaking news, state politics and investigations. She is based in Sydney. Contact her on carla.mascarenhas@austcommunitymedia.com.au
