Health services hit hardest by regional housing crisis

It is the latest evidence of a shortfall one leading economist called "a long running constraint on national economic growth".

The research from Regional Cities Australia (RCA) surveyed 18 major regional cities to discover the areas worst affected by the housing shortage and the key factors holding back development.

RCA chair Kylie King said the results showed the housing crisis was spreading into other sectors.

"Unfortunately, the housing crisis is now becoming a health and employment crisis," Cr King said.

"The critical shortage of housing in regional Australia is severely impacting local employment, essential services and the delivery of major national projects such as our transition to renewables."

Every city surveyed for the study said its local health services had been affected by the lack of housing.

The average regional rental vacancy rate was just 0.8 per cent in late 2023, with many regional cities reporting rates of 0 per cent.

All but one city said its major local industries had also been hit by the shortage, while 87 per cent said infrastructure, construction and tourism had also suffered heavy blows from the lack of permanent accommodation.

The latest Regional Movers Index from February showed 25 per cent more people migrating from Australia's major metropolitan centres to the regions in 2023 than in the opposite direction.

It was the fourth straight year of significant movement away from the major capitals into the regions.

Cr King said regional capitals were home to 4 million people and generated $225 billion to the national economy each year.

"The importance of regional capital cities to the nation cannot be overstated," she said.

But she said current housing and infrastructure investment didn't reflect the significance of those major regional centres.

The RCA report applauded the new $500 million federal Housing Support Program to fund trunk infrastructure, but said the program needed a regional stream for country areas to benefit.

One of the critical issues holding back housing creation in regional areas was a lack of qualified builders, planners and engineers.

The report noted this skills shortage was largely driven by the lack of available housing for such workers.

It found 87 per cent of surveyed regional cities lacked electricians and plumbers, 80 per cent lacked construction managers and engineers, and 73 per cent lacked statutory and strategic planners.

Major capital works investment in the state capitals has driven continual demand for such jobs in the metro areas, making the task of luring workers to the country even more difficult.

All but one regional city said state and federal policy settings were working against them meeting future housing demand.

Albury on the banks of the Murray River is home to 56,000 people, with both internal and overseas migration driving a recent spike in population.

The rising population has made housing expensive and scarce, but an ageing population - 20 per cent of residents aged 65 or older - has also created a mismatch between the demographics and the type of housing available.

At the most recent Census in 2021, 31 per cent of Albury residents lived alone, but just 3.7 per cent of dwellings were one bedroom.

The local council launched a housing strategy in 2023 to boost the diversity of Albury's housing stock, but skills shortages, a lack of enabling infrastructure, and state housing fund regulations have stymied progress.

Dubbo in central-west NSW is another major regional centre where the housing supply is out of kilter with its demographics.

Population growth in the 55,000-strong city has been powered by major project and fly-in fly-out workers, along with tree-changers during the COVID-19 pandemic.

The influx has pushed both house prices and rental costs up nearly 50 per cent in four years.

It has also shifted the demographics so one-person and couple only households make up 55 per cent of the total, while less than four per cent of dwellings are one bedroom.

Dubbo has extensive land for development, but a lack of enabling infrastructure, planning experts and developer incentives are likely to constrain new housing growth.

Ballarat in Victoria's central highlands has also seen a spike in population, but sitting just 1.5 hours from Melbourne its boom has been driven by young families attracted to a regional lifestyle and improved cost of living.

The influx has created a huge shortfall in social and affordable housing, with the gap between supply and demand pushing past 5000 dwellings in 2023.

Like Albury, Ballarat has launched a housing strategy to guide development and has identified sites for 29,000 new homes to be built by 2041, but a lack of builders and tradespeople looms as a problem.

Ballarat is also one of many major regional cities with a growing amenity shortage. Regional Australia Institute chief economist Kim Houghton said this was the result of more than a decade of underinvestment.

"A lot of regional communities are feeling the pinch, particularly in social infrastructure, housing, community services, childcare, all those sorts of things have been underdone," Dr Houghton said.

"We need to start taking this stuff seriously. This is no longer a post-COVID blip, this is a long running constraint on national economic growth."