It's one of the proposals contained within the 160 submissions made by industry stakeholders to the state government's Regional Housing Taskforce, convened to address housing shortages and related issues in regional areas.

Other methods proposed during the taskforce's consultation period, which concluded August 27, included providing incentives for development, zoning more land residential, and creating additional social and affordable housing.

Read more: Housing supply, affordability at 'crisis point' in the Illawarra: UDIA report

Deputy Premier John Barilaro announced in July that planner Garry Fielding would chair a Regional Housing Taskforce, with the government conscious that migration away from large cities during the pandemic had been pushing up prices in the regions.

"With the pandemic transforming the way we live and work, we've seen a noticeable shift in people leaving cities for a sea change or tree change in the regions," Mr Barilaro said at the time.

"But with that, prices are escalating. This is why we've set up this taskforce to provide independent advice to deliver more housing throughout the state."

As part of the process, public and key stakeholders were consulted to help identify constraints to housing supply, diversity and affordability in the regions.

The CHIA (Community Housing Industry Association) NSW was among the organisations to make a submission and is a proponent of opening up more government land for development.

CEO Mark Degotardi said that along with unlocking government land, engaging with local councils, delivering resources to community housing providers, and creating social and affordable housing would all combine to lessen the housing crisis facing regions such as the Illawarra.

"Our submission included a few things the government needs to consider to alleviate that crisis," he said.

"The first of those is unlocking available state government land - the government has significant land holdings across the major regional areas.

"They need to make that land available for development. And when unlocking that government land, you need to set aside some of it for social and affordable housing.

"It's also important that the NSW government and local councils work together to take advantage of opportunities within local areas, through creating the right planning controls and the right partnerships with local community housing providers.

"It is critical local governments be involved in those conversations, as local councils know better than anyone else what's needed in their area."

According to the government, more than 500 people across regional NSW participated in the taskforce's virtual roadshow, including stakeholders and community members from the Illawarra/Shoalhaven.

Read more: Could tiny houses solve regional Australia's housing crisis?

Property Council has its say

The Property Council of Australia was also among the groups to provide feedback, making a joint submission on behalf of its Hunter and Illawarra chapters.

The submission noted critical housing issues faced by regional communities.

These included limited supply of housing caused by lack of sites with infrastructure and high taxes and levies; housing affordability due to rising prices; lack of new supply putting significant upward pressure on land values; and high rents and long-term rental shortages due to Airbnb-style rentals.

The Property Council also outlined ways the NSW and local governments can better support housing delivery and help bring supply to the market faster.

These included providing incentives for development; priority development approval assessments for affordable housing; streamlining the planning process; and zoning more land residential and providing more resources to local government to adequately plan for these zoned areas of land.

The Property Council also recommended exploring the opportunities provided by the emergence of the build-to-rent model in Australia, and what incentives can be applied to attract development to regional centres that would benefit from this model.

The Regional Housing Taskforce will prepare an independent report to the Minister for Planning and Public Spaces in the coming weeks on how the planning system can be better utilised to address housing needs in the regions.