Property owners have cashed in on the COVID-era surge in domestic regional travel, boosting new Airbnb host numbers by more than 30 per cent over April, May and June compared to same period last year.

"For those who have begun hosting recently due to the changes in cost of living the ability to earn is still strong," Airbnb said in a statement.

"Hosts in Australia also indicated they expect that income earned through hosting will become more important, with 19 per cent saying they expect to become more reliant on host income in the next year."

But with so many properties tied up in the Airbnb and holiday let markets, some popular holiday and weekender destinations are struggling to provide affordable homes for locals.

In the World Heritage-listed Blue Mountains west of Sydney 3566 homes - 10.5 per cent of residential properties - sat empty on Census night in August 2021.

As of August 2022 there were 905 Airbnbs listed in the Mountains.

The local council has called on home owners with investment properties to place them on the long-term rental market.

"While we value visitors to our Blue Mountains region and the boost this brings to our local economy, we need to balance this with the need for quality housing for our local community," Mayor Mark Greenhill said.

"As with many parts of regional Australia, we are currently experiencing a critical housing shortage in the Blue Mountains, forcing people into homelessness.

"I urge anyone who has an additional home, whether it be used as a holiday home for personal use or for short-term rental, to consider opening that home to long-term renters."

In the wine region of Mudgee to the west of the Blue Mountains - also popular for holidays and weekend retreats - 1,345 homes were vacant at the last Census count.

The Airbnb website shows in August 2022 there were 473 properties available for short-term stays in the area. The cheapest at the time of publication was $775 for a one-week stay.

Some residents of these holiday destinations, which attract Sydneysiders looking for quick escapes, blame the proliferation of Airbnbs for the lack of rentals.

"They [Airbnbs] are taking over the town and single people find themselves homeless because they are kicked out of rentals they have been in for three years so the owners can make more money on short-stay accommodation," a 36-year-old from Mudgee wrote in response to an ACM survey of local readers.

"That's what happened to me. I've been couch surfing since early May."

Another resident of Winmalee in the Mountains said Airbnbs were only useful for groups, not individuals.

"Airbnbs are good for groups of people but the houses sit empty while people struggle to find affordable places to live," the 25-year-old said.

Mid-Western Regional Council is matching a $1.4 million grant from the NSW Government with $1.1 million for more affordable housing in Mudgee.

But Mayor Des Kennedy was not keen on forcing people to take their properties off Airbnb and offer them to renters.

"I don't know whether we would have regulations that say you can't Airbnb your house and that you have to put it on the rental market," he said.

READ MORE:

"A couple of hundred" Mudgee properties that were rentals five years ago were now Airbnbs, Mr Kennedy said.

"With the influx of tourism, the person who owns it knows they can get seven or eight hundred bucks a week with it as an Airbnb, rather than 350 bucks a week if they were to rent it.

"It'd be a hard slog to go and tell people, 'That investment property you've got, we don't want you doing an Airbnb. You need to rent it to that person for $300 a week'," he said.

"I would rather see us identify land and build affordable housing. It's affordable rent; it's not for profit. I'd be more inclined to tread that way."

As someone who has experienced first hand the challenges of housing insecurity, Blue Mountains MP Trish Doyle said seeing people struggling to find a home was "horrendous".

"I grew up as one of four kids with my mum who escaped domestic violence; I remember living out of the car and going to refuges as a kid," she said.

"It impacts all of your life - your health, your education, your connection to place, your sense of self.

"It's not just about a roof over your head, it's very much about safety. From a very personal level, I know that life."

While "there aren't any easy solutions" to the housing crisis, Ms Doyle said if people were to start seeing housing projects - big or small - completed, it would help others see a light at the end of the tunnel.

"I think it's important for the government to look at the use of some of their property. They also need to invest in affordable, public housing whether it's community run or not," she said.

Projects involving community housing providers, Aboriginal people, women's groups, and charities showed real promise in the Mountains.

"They're talking about fundraising and purchasing five tiny homes to at least provide some relief for someone," Ms Doyle said.

"If we can see those sorts of projects actually succeed then I think people will feel some sense of hope and that's what we have to focus on."

This story is part of ACM's Young and Regional series. Read more here.