By Alicia Follent, Acting CEO and John De Vries, Chair of the Board

 

Regional Australia is facing a housing crisis that the headline numbers cannot fully capture. The national rental vacancy rate has fallen to 1.1%; in regional areas it is tighter still, at around 0.9% (as of end of 2025). Anything below one to two per cent signals serious scarcity and much of regional Australia is well beyond that threshold.

The pressure runs deeper than vacancies. More than half of low-income households are in housing stress. There are at least 169,000 households on social housing waitlists nationally and this is growing – in some markets by double digits within a single year. Priority applicants in some regions wait well over a year for placement and many have been in the queue for five years or longer. In many regional centres social and affordable housing is almost non-existent.

Existing stock presents its own challenge, with significant concentration in major cities, leaving communities with shrinking room to move. Much of the social housing in regional areas is ageing, with significant deferred maintenance and little prospect of renewal. New development has stalled in many markets because construction costs exceed achievable returns.

None of this is new. The fragilities were embedded in the system long before the pandemic made them impossible to ignore. What the pandemic did was accelerate and expose pressures that had been building for years, in places that had largely been left to manage on their own.

Nearly one third of Australians now live in regional Australia. These communities face the same structural pressures as metropolitan centres, often more acutely. They deserve the same attention, investment and the long-term commitment to deliver affordable housing.

A problem that compounds

 

Regional housing delivery looks straight-forward on paper. In practice, the barriers stack.

Demand is outpacing supply, layered with planning frameworks not designed with regional complexity in mind nor the societal shift occurring. Other layers include limited buildable land, workforce shortages that can make delivery harder and costly, and perceived risks that conflict with funding models and partners.

Supply chains in regional areas are often underdeveloped and can be overwhelmed with competing infrastructure priorities. Materials, contractors and capacity that cities take for granted do not exist at the same scale outside them. In addition, climate disasters are increasingly reshaping housing need in ways that hit regional communities hardest.

Across all of it sits a policy environment that too often treats regional Australia as an extension of the city, when it operates by entirely different rules, needing a different and tailored approach.
Each of these pressures is significant on its own. Together, they make regional delivery genuinely difficult. Not because of a lack of will, but because of system level failures that require system level structures.

Barriers to supply

 

There is a consistent delivery gap in regional areas and it is the result of system-level problems operating simultaneously.

Planning and infrastructure lag together

Inconsistent planning frameworks add uncertainty and delay, that neither developers nor community housing providers can absorb. Roads, water and sewerage routinely lag rezoning decisions by years. Theoretical supply stays stranded: the land exists on a map but cannot be built on.

Risk and funding allocation are misaligned

Providers commit significant capital before funding is confirmed. Programs are announced with one set of parameters and delivered with another because they have to be on a practical level. Program parameters rarely reflect the regional costs and structures, systematically disadvantaging non-metro providers from the outset.

Construction capacity is declining

Housing construction productivity has fallen 12% since 1995. The industry is fragmented, with the average residential building firm employing fewer than two people. These challenges are even sharper in regional areas, where there are fewer builders, trades are harder to retain and every input costs more due to distance and logistics. Builders factor that risk into margins and contingencies, further reducing viability of social and affordable projects where revenue is already constrained.

Program design has not kept pace

For thirty years, delivery has been sporadic and program-driven, with stop-start funding tied to political cycles. Institutional investors who could bring capital at scale require predictable returns. However, the current system does not offer this consistently.

What systemic change looks like

 

The regional affordability divide is not just persisting. It is widening. A systemic problem needs systemic change. Fixing the delivery gap is a physical and financial challenge with five key areas of focus to drive the necessary change.

• Economies of scale: enable investment at scale in regions by concentrating on a pipeline approach and partnerships to deepen the footprint rather than scattering resources.
• Partnerships: effective housing solutions require genuine collaboration across all levels of government and sectors. In regional locations, finding the right partner while still relying on local trades for implementation is not a compromise – it works.
• Subsidies: social, affordable and market housing all require some form of subsidy to be delivered at the scale communities need. Without meaningful government support, the numbers do not work. The conversation needs to shift from whether to subsidise, to how subsidies should be structured, targeted and leveraged.
• Portfolio model: move away from project-by-project delivery and funding toward packaging multiple homes across locations into a single coordinated mechanism. A portfolio or pipeline approach creates volume, spreads risk, enables efficiencies and signals long-term intent to investors and government.
• Modern construction: modular and prefabricated construction enable faster delivery, reduced reliance on scarce trades and greater consistency. This combination of factors can reduce the financial costs of a project overall compared to more traditional building methods.

Change is happening, but not evenly

 

System-level changes are occurring but not consistently or collectively across Australia.

Institutional investment is growing to make regional projects commercially viable, with superannuation funds and private capital showing increasing interest in affordable housing as an asset class. Partnership models are evolving, with public, private and community structures beginning to share risk and pool capital. Government, investors and the community housing sector are also increasingly aligned on the need for programmatic delivery models that can operate at scale and volume – with community housing providers positioned as central to retaining and operating social and affordable housing for the long term.

However, these shifts are concentrated mainly in metropolitan markets. Many regional markets are still waiting for the pipeline, the partnerships and the funding models to be calibrated to where they are actually needed.

Two examples of funding models that target and reach regional markets include the Queensland Government’s Housing Investment Fund and the Federal Government’s Housing Australia Future Fund (HAFF). The mechanism connecting both models is government backed-availability payments over a 20-to-25-year life that bridge the gap between delivery costs and rental revenue, giving community housing providers the certainty needed to secure institutional debt.

Together these models represent what layered funding architecture looks like when it works: housing treated as critical infrastructure requiring structured capital rather than a welfare line item. That certainty is what unlocks supply and the sooner it is adopted consistently across policy and investment circles, the faster delivery will follow and reach front doors.

Community housing providers are a critical conduit

 

Community housing providers tend to have end-to-end exposure across the lifecycle of housing developments. At CHL, much of our portfolio sits outside capital cities and we operate across development, delivery and long-term management. That exposure means we see exactly where the system works and where it breaks.

Community housing providers translate government policy into viable projects, structure deals that give investors confidence, manage assets over the long term and deliver the services that sustain tenancies. Collectively, community housing providers carry the risk, the relationships and the accountability that neither government nor investors are positioned to hold directly.

At CHL, with 33 years of experience across all states and the Northern Territory, we operate a networked model to deliver housing in a variety of locations – through centralised functions, mobile services, local contractor networks and community partnerships that keep delivery grounded in place. The goal in every market is the same: tenancy sustainment and long-term asset performance. Not because it is operationally tidy, but because every person deserves a safe, secure and affordable place to call home. No community should be left behind because of where it sits on the map.

In regional and remote markets, our role is even more critical. A house is only the beginning. Stable tenancy and property management, delivered by a provider with genuine roots in the community, determine whether housing produces lasting outcomes or simply moves the problem along. Done well, the impact extends well beyond the individual household, building the foundation for people to participate in their communities, maintain employment and access services.

That kind of presence cannot be parachuted in. It has to be built over time, through sustained investment in relationships and partnerships, local knowledge and operational capacity in markets others will not enter. Community housing providers willing to do that work and stay are the ones the system depends on most; a critical conduit to deliver positive outcomes for all involved.

Regional housing is not a niche problem. It is a national one, distributed across communities that rarely make headlines but carry significant social and economic weight. The solutions are known. The funding mechanisms exist or are being built. What is needed now is the will to apply them consistently, at scale and for the long term. Every year the gap widens, the cost of closing it grows. The need for collective and collaborative change has never been greater.