There are signs the growth in the price of housing in regional areas could be slowing, but there are concerns it will not do anything to help people in rental crisis.
The latest quarterly price report from Domain revealed the average price of a house in regional Australia increased by 3.1 per cent in the first quarter of 2022.
It is a growth rate surpassing several capital cities; the same period saw house prices in Sydney barely move, and dip slightly in Melbourne and Canberra.
But Domain's chief of research and economics, Nicola Powell, said the rate of growth in regional New South Wales was three times slower than the last three months of 2021.
"I think affordability is becoming a hurdle," Dr Powell said.
Coastal NSW towns, such as Byron Bay and Kiama, have seen a more than 40 per cent increase in property prices over the past year.
Dr Powell said the recent softening could be because buyers were hesitant to take out a large mortgage, with the average price for a house in regional New South Wales hitting a record high of $730,000.
"With the prospect of interest rates moving higher, that will impact borrowing capacity," she said.
'Lock, stock, and barrel'
While some capital city prices are flatlining, Dr Powell believed people who recently bought in the regions were unlikely to go back.
"Those people who have purchased in regional markets really show that it's kind of a lock, stock, and barrel move," she said.
Dr Powell said the COVID "escapees" who might return to the city were more likely to be renting.
This week's rental affordability snapshot by Anglicare shows the number of available rental properties had plummeted.
"We're seeing a real market failure," Anglicare CEO Simon Miller said.
Mr Miller said a correction to demand levels in regional areas, like western NSW and the New England regions, will not be enough to resolve the housing crisis.
Mr Miller said government programs to boost the stock of social and affordable housing had focused too much on metropolitan areas.
"This is something that we really should be hearing more about in a federal election," he said.
