Housing Industry Association (HIA) figures released this week showed there were just over 2000 building approvals in the Hunter in the 12 months to June, half the 3987 needed to cater for a population growth of 1.49 per cent during that time.

In Port Stephens, which had the region's second highest population growth, only one-quarter of the 800 new houses required were built.

Maitland, which had the region's highest population growth of 2.6 per cent, had only 361 buildings approved, despite needing 754.

Not one of the region's local government areas met the required housing approval level.

Real Estate Institute of NSW vice-president and Hunter chairman Wayne Stewart described the situation as "devastating" and blamed a lack of land and government red tape.

"It's just not good enough," Mr Stewart said.

"The fact that the Government has known about this problem for the past few years and still has done nothing about it is ridiculous. They are just not moving quick enough on the problem.

"The Government seriously needs to do something about the red tape so that developers can come on line quicker and for cheaper."

Mr Stewart said approval times combined with costs meeting BASIX and fire control regulations turned many off wanting to build.

HIA senior economist Ben Phillips said the Hunter's figures were worrying, considering they were similar to Sydney's, which had a much larger population.

"The implications are that house prices will continue to move forward and there will be even lower vacancy rates for rentals, which is alarming considering the Hunter has historically low rental vacancy rates," Mr Stewart said.

"It also means that rents will only continue to grow," he said.

Hunter Valley Research Foundation researcher Simon Deeming said the boost to the first-home buyer stimulus lifted the region's approval rate earlier this year, only for it to decline due to a lack of confidence because of building company collapses.

He said the region's rental prices were still relatively low and could accommodate a rise.

Hunter Valley Research Foundation figures showed the Hunter's building approvals last financial year were down 30 per cent on the 10-year average.