The number of short-term holiday rentals in Western Australia's biggest food and wine region has grown by almost 20 per cent in the past year amid an ongoing rental crisis that has seen locals forced into homelessness. 

The number of short-stay properties, such as Airbnbs or Stays, within the City of Busselton sits at just over 1,000 while long-term rental vacancies continue to remain below 1 per cent.

The chief executive officer of Accord West, Evan Nunn, said the new figures were no surprise, given the rise in interest rates and cost of living.

"The cost of paying for rental properties and interest is increasing; also the number of people who are retiring," he said.

"In terms of its impact on the homeless and people at risk of homelessness, it has just continued and it is further pressure on that situation."

President of the Real Estate Institute of WA Joe White said rental vacancy rates had been tight in Busselton for some time.

"For someone wanting to rent a house, it's tough. Lots of applicants, particularly for the cheaper stock," he said.

"We're talking vacancy rates still around the 0.7 per cent to 0.8 per cent, which in real terms basically means someone's moving in at the front and someone's moving out of the back.

"So that's very tight, we'd expect a balanced market to be around 2.5 to 3.5 per cent."

Nationwide problem

The tourist hotspot is currently undergoing regulatory changes that, according to the city's planning director Paul Needham, aim to reduce the effect of holiday homes on neighbours.

Changes to local laws have seen night curfews imposed on guests and dogs to never be left unattended, giving the city power to deregister holiday homes not adhering to the new code of conduct.

It is an issue tourist towns around the country have grappled with, with the Byron Bay council in New South Wales pushing ahead with plans for a 60-day annual cap of short-term holiday letting to address its housing crisis. 

The WA government is considering the same idea and conducted a public inquiry that attracted more than 2,000 submissions, but City of Busselton Mayor Grant Henley had previously raised concerns on the complexity of policing a cap.

He accused the state government of dragging its feet in finalising the laws.

"I think 2017 was a parliamentary inquiry — so we've been waiting for a long time," he said.

"We were required to do a review of our local law, which we undertook, and at the same time we've looked at our other regulatory framework and we've spoken to our community."

The latest Australian Bureau of Statistics figures showed the rental, hiring and real estate service industry profits had ballooned, increasing by $8.5 billion last financial year.

Community approach needed

Mr Nunn said increased regulation to limit the number of short-term rentals in the tourism region was not necessarily the solution.

"There are so many demands on the south west as we all know as a tourism destination and beautiful place to live."

The housing advocate said the housing crisis was a nationwide problem and he encouraged a community-based approach.

"There's always the opportunity for people to think about what they might do as a group. We had the successful tiny house initiative in Bunbury, which has worked really well," he said.

"Getting land freed up for social and affordable housing is a good thing."

Mr White agreed that housing supply was where the focus should be.

"The debate can descend into a very dangerous place where you're arguing about what that house is going to be used for, where there's a disincentive to invest in housing because of the restrictions on what you can use it for, whether it's Airbnb or permanent living," he said.

"The big part of the problem is just total housing, we simply need more total housing, particularly more social housing for those most vulnerable."