But the increase in supply will require funding for infrastructure to support the new homes, the Regional Australia Institute says.

Median home values across regional Australia surpassed $605,000 in December 2023, an increase of 54 per cent since March 2020.

It puts the price of a regional home almost on par with where capital city prices were three years ago.

Regional Australia Institute chief executive Liz Ritchie said there had been 12 per cent growth in population in the regions since the pandemic.

"We are witnessing a societal shift that is seeing more people from our capital cities want to move and live and work in our regional communities," she said.

"Many punters believe that this is reversing and we're here today to tell you strongly that it's not."

Up to 3.5 million people are also interested in moving to regional areas, Ms Ritchie said.

Solutions to fix the shortage of homes in regional Australia were the focus of the National Regional Housing Summit in Canberra, hosted on Friday by the Regional Australia Institute, the Real Estate Institute of Australia and Master Builders Australia.

A "fair share" of the federal government's Housing Australia Future Fund was among the demands from the group, as well as support for local infrastructure.

Greater diversity of housing types would need to form part of the solution to increase supply, Ms Ritchie said.

"We're crying out for one- and two-bedroom apartments in regional Australia," she said.

Master Builders Australia chief executive Denita Wawn said detached houses were not the solution for every regional area.

"We need to build more homes, in the right places, for the right reasons," she said.

"We've got to have a conversation, for example, around medium density and low, small high-rise [housing] in regional centres," she said.

A mix of housing types would help attract professionals and essential workers to regional communities, Ms Wawn said.

"If we're getting ... professionals coming into cities ... and they want to travel between city and regions, they don't want a detached house with a large garden," she said.

City of Sydney councillor and president of the Australian Local Government Association Linda Scott said local councils needed to be "part of the picture".

Cr Scott pointed to a public housing development in Moree, NSW that did not have local condition of consent to reflect the soil conditions. She said it was an example of where local councils are crucial to developing housing.

"They built all this housing, approved by the state government, and it sunk because the soil is fertile and soft," she said.

"Councils have a role in the quality control of the housing."

The group is also calling for a "fair share" of the federal government's $10 billion Housing Australia Future Fund.

The fund will support the construction of 30,000 social and affordable homes over five years.

The Regional Australia Institute wants 40 per cent of the fund to be allocated to building social and affordable houses in rural and regional Australia.

"We are really underdone when it comes to social and affordable housing because it was never a focus. It needs to become a focus," Ms Ritchie said.

More homes in regional Australia won't be possible without the appropriate infrastructure, the group says.

Cr Scott said local regions needed more federal government support to make the infrastructure happen.

"Without drainage, without footpaths, without roads, new housing developments simply can't proceed," she said.

"And of course the cost to the public of retrofitting drainage under infrastructure built is so much more expensive."