Regional NSW is no longer a rental affordability escape valve and is now officially less affordable than Sydney with the average rental household spending more than 30% of its income on rent, according to the nation's most authoritative rental affordability study.
The 11th annual National Shelter-SGS Economics and Planning Rental Affordability Index, which compares rents with incomes, found Rest of NSW affordability declined 2% over the past year, reaching a Rental Affordability Index (RAI) score of 99 - below the critical threshold where households enter rental stress.
"Regional NSW once provided a reservoir of rental affordability when compared to Sydney. Sadly, that's no longer true," said Shelter NSW CEO, John Engeler.
"While the Federal Government has made vital steps towards turning this situation around, through the Housing Australia Future Fund (HAFF) and National Cabinet's Better Deal for Renters, the scale of ambition must not diminish.
"We must build on recent momentum to more quickly address Australia's most pressing social and economic challenge including targeting next rounds of the Housing Australia Future Fund (HAFF) to particular cohorts."
SGS Economics & Planning Principal Ellen Witte said: "Long stretches from Tweed Heads to Port Macquarie are now severely unaffordable. Byron Bay, for example, remains one of the least affordable locations in the entire country.
"It is stark and sobering when regional NSW offers less rental affordability than a global financial centre like Sydney."
The report found that acceptable to very affordable rents are now largely restricted to rural and remote areas with limited access to services. Regional centres including Bathurst, Orange, Tamworth and Dubbo, previously considered acceptable, are now moderately unaffordable.
For vulnerable groups, the situation is particularly acute. A single person receiving JobSeeker payments would need to allocate 71% of their income towards rent in regional NSW, while a single pensioner would need to spend 44% of their income - both well above the affordability threshold.
However, the report also showed that the rapid decline seen in previous years has begun to slow, offering some hope that conditions may stabilise in the period ahead.
Robert Pradolin, Founder & Executive Director of Housing All Australians, which has recently become a partner in the Affordability Index, said the rental crisis is directly impacting regional economies and communities.
"Whether they are in light manufacturing, mining or horticulture, businesses across regional NSW are struggling to find staff because there's simply nowhere affordable for them to live," Mr Pradolin said.
"We need to get away from seeing this purely as a social crisis. Housing is absolutely critical economic infrastructure and whether you're in Byron Bay or Bathurst, you need an affordable roof over your head.
"To address our affordable housing shortfall we must build 44,500 homes each year for 20 years. Governments can't do this on their own and so innovative public-private partnerships will continue to be absolutely vital."
With the average rental household in regional NSW earning $94,239 annually - significantly less than Sydney's $130,273 - yet facing similar or higher median rents, the affordability crisis is affecting a broad cross-section of regional communities.
