Regional Rental Crisis Deepens: Australia’s Housing Affordability Hits Record Lows, Driven by Outward Migration
Rental affordability in regional Australia has reached its lowest point on record, with many areas now experiencing severe housing stress, according to the 11th annual Rental Affordability Index (RAI) released by SGS Economics and Planning, National Shelter, and Housing All Australians.
The new data confirms that the crisis has shifted beyond major metropolitan areas, with Regional Queensland remaining the least affordable regional area in the country.
Housing affordability is no longer viewed merely as a social welfare issue but is recognized as a fundamental threat to Australia’s productivity and prosperity. The persistent shortage of affordable housing now directly impacts business operations across all sectors nationally.
Least Affordable Jurisdictions Under Stress
The Rental Affordability Index (RAI) is designed to measure housing stress, where a score of 100 or less means households are spending more than 30% of their income on rent, crossing the critical threshold for housing stress.
Regional Queensland registers a grim RAI score of 94, indicating that renting at the median rate would consume more than 30% of the average rental household’s income. Affordability in the region has deteriorated significantly, declining by 7% per year since 2020.
Regional NSW is also under severe strain, sitting below the critical threshold with an RAI score of 99.
Regional Western Australia (WA), despite being the only Affordable rest of state area in 2020, has experienced the steepest decline, deteriorating by 8% a year over the last five years, and its rents are now classified as Moderately Unaffordable (RAI 109).
Overall, most Australian regions, excluding South Australia, have reached record-low affordability over the past two years, with affordability declining across all regional areas by 1% to 5% over the last year.
Migration and Economic Impact
The sharp decline in regional affordability has been a persistent trend since 2020, with affordability decreasing in every rest of state area by at least 4% per year. This trend accelerated during the COVID-19 pandemic when outward migration from cities drove up housing demand against limited regional supply.
This has created a two-tiered system where existing regional households, who typically earn less than city residents relocating to work remotely, are left at a disadvantage when competing for limited housing stock.
The growing populations in regional areas increase the demand for essential services, which then become difficult to deliver due to the lack of affordable local housing for workers. Essential workers—including nurses, teachers, and police officers—are increasingly unable to afford to live where the jobs are. The lack of affordable housing has thus become a critical economic issue for businesses facing chronic staff shortages.
South Australia Remains the Acceptable Anomaly
Amid the widespread decline, Regional South Australia (SA) remains the only non-metropolitan jurisdiction with Acceptable median rents (RAI 123). Regional SA even saw a slight improvement in affordability over the past year.
Affordable Housing as Economic Infrastructure
The 2025 Rental Affordability Index strengthens the argument that affordable housing must be considered essential economic infrastructure, as vital to productivity as ports or telecommunications.
Robert Pradolin, Founder of Housing All Australians, highlighted the severity of the crisis, noting that “Every worker lost to housing stress is potential unrealised, productivity diminished, prosperity deferred”. He stressed that the business sector is ready to participate in solutions but requires policy settings that recognize housing as economic infrastructure.
Ellen Witte, Principal and Partner at SGS Economics and Planning, asserted that the RAI provides evidence that housing costs are “profoundly impacting lives and communities,” underscoring the urgent need for a system that delivers improved housing affordability.
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