Australia’s “Great Australian Dream” is alive, but for many in regional Australia, it’s slipping further out of reach. Our latest research makes one thing clear: our regional housing crisis is not just a side effect of urban pressures—it’s a crisis in its own right, demanding urgent, tailored action from all levels of government
For years, regional Australia has been celebrated for its affordability, lifestyle, and opportunity. But the pandemic-driven population boom has exposed cracks in the system. Housing approvals and construction have lagged far behind population growth, and the result is a chronic shortage that’s hitting renters, buyers, and especially key workers—teachers, nurses, childcare staff, and emergency personnel—who are the backbone of regional communities.
The numbers are stark. Vacancy rates in regional rental markets are consistently tighter than in the capitals, and rents are rising faster. In December 2024, the regional vacancy rate was just 1.7 per cent compared to 2.0 per cent in the capitals, and rental prices are rising faster in the regions. In many regional areas fewer than one-in-a-hundred rental properties are available. Over the past five years, regional house prices have soared by 62 per cent, outpacing the 38 per cent rise in the cities. The much-touted affordability advantage of the regions is rapidly eroding.
What’s driving this crisis isn’t just demand. The report lays bare a web of structural barriers unique to the regions. The cost of building new homes -especially small-scale or piecemeal developments - often exceeds their market value, making projects financially unviable for builders and developers. Add to these higher costs due to distance, limited access to skilled labour and materials, and regulatory hurdles, and it’s no wonder we are seeing shortfalls in new regional housing supply.
Detached houses still dominate regional housing supply, despite growing demand for townhouses, units, and apartments. For many regions, their local building industry is typically geared toward small-scale, detached homes, lacking the capacity and financial muscle to deliver larger, more complex projects. Financing for innovative or multi-unit developments can be difficult to secure without government intervention.
Despite the scale of the problem, the national housing debate remains capital city-centric. The National Housing Accord’s ambitious target of 1.2 million new homes over five years is commendable, but without a regional sub-target, the risk is that most new homes will be built in the capitals, leaving the regions further behind.
The RAI calls for 40 per cent of the Accord’s target - 480,000 homes - to be delivered in regional Australia, with matching state targets.
Governance is another blind spot. The report recommends appointing a Regional Housing Commissioner at the federal level, and dedicated regional housing agencies in every state, to ensure regional voices are heard and needs are met. South Australia’s Office for Regional Housing is a model worth replicating nationwide
There’s no silver bullet, but a multitude of solutions requiring a multi-faceted approach. Modern methods of construction- like modular and prefabricated housing -offer hope for faster, more affordable builds, especially in remote areas. These new methods can start to take-off with the right information, funding and regulatory support. Strategic partnerships between councils, community housing providers, and the private sector can unlock new supply and revitalise communities, as seen in projects like Griffin Green in Griffith and the Woree Social Housing project in Cairns that can replicated in other regions.
Governments must also invest in enabling infrastructure, reform planning and zoning, and target funding for key worker, social, and affordable housing. Skills training and migration policies should be tailored to build the regional construction workforce.
The regional housing crisis is not just a regional issue - it’s a national one. If we want thriving, resilient communities outside our capitals, we need a fundamental reset in how we plan, fund, and deliver housing in the regions. And by meeting the ever-growing demand for regional living it will help reduce the crowding pressures in our capital cities.
More regional housing is a win-win for the country and the recommendations in our report can help to get us there. It’s time to answer the call for regional housing, so that every Australian, no matter where they live, has a safe, secure, and affordable place to call home.
Simon Pryor
Research and Policy Director, Regional Australia Institute (RAI)