Regional small businesses are increasingly lifting wages to offset local housing shortfalls, according to the Council of Small Business Organisations Australia's (COSBOA) 2026 Small Business Perspectives Report, sponsored by CommBank.
The report, based on a survey of 572 regional small business owners conducted by Survey Matters, found around one in three regional businesses have raised wages specifically to cover housing costs for staff, while nearly a quarter report difficulty recruiting workers who would need to relocate. Among businesses employing five to 19 people, the pressure is sharper still, with half reporting they've had to lift wages and more than a third citing relocation difficulties.
COSBOA CEO Skye Cappuccio (pictured left) said the pressure facing regional operators extends well beyond cost alone.
"Regional businesses are managing higher operating costs while also dealing with housing shortages, workforce constraints, and limited access to essential services – barriers many metropolitan businesses simply don't experience to the same extent," Cappuccio said.
Underlying these pressures is a broader finding: housing access is the poorest-rated service among regional small businesses surveyed, ranking below childcare, health services and connectivity. More than half rate housing access in their local area as poor, with just 7% rating it as good.
Some businesses have gone further, with a growing share now providing employer-assisted housing directly — an approach the report describes as "a workforce strategy of last resort in the most affected regions."
CommBank executive general manager, small business, Rebecca Warren (pictured right), said the findings reflected patterns the bank sees directly through its regional customer base.
"As a bank that supports more than one in four businesses in Australia, we know these challenges can often be more pronounced outside our major cities," Warren said.
Business owners pointed to slow planning approvals, metro-comparable rents, the growth of short-term rentals, and investor concentration in regional markets as key drivers of the shortage. One respondent, a sole trader in the arts and recreation sector, noted that a rise in short-term rentals in their area had pushed housing "beyond the means of many locals forcing them to move away."
The findings align with the Regional Australia Institute's call for 40% of the 1.2 million homes under the National Housing Accord to be built in regional Australia, citing rental vacancy rates well below the benchmark needed for functioning regional housing markets.
Cappuccio said resilience alone isn't a substitute for policy support.
"Resilience should not be mistaken for capacity to absorb endless pressure. The ambition is there – the right policy settings now need to support it," she said.
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