Commissioned by the Property Council of Australia, the report claims by 2024, the number of homes needed in the Wollongong, Shellharbour and Kiama Local Government Areas will have fallen short by almost 14,270.

According to the Property Council, the region has already failed to reach its housing targets in the past decade to the tune of 6460 homes, with that trend projected to continue.

However, Wollongong City Council general manager David Farmer criticised the report, arguing the targets, which were set in 2006, were simply too high and no longer relevant.

The Property Council's Illawarra regional director, Peta Fitzgerald, said the region's economy was already feeling the effects of a housing shortage and the situation would only worsen.

"We need to turbocharge housing supply because right now home buyers and our economy are paying the price," she said.

"If we fail to keep pace with demand, we drive up prices and make housing less affordable for the next generation of home buyers."

Although the local council process could be protracted, Ms Fitzgerald said the state's "clunky, slow, conflicted" planning system was largely to blame for drawing-out the housing approval process and was in dire need of streamlining.

"A big priority needs to be speed-to-market, getting better infrastructure in place and delivering on the urban renewal opportunities where they exist, particularly in our city centres," she said.

"And NSW needs to overhaul its planning system to make it simpler, easier and more efficient."

Mr Farmer said the housing targets, which the report is based on, were set as part of the Illawarra Regional Growth Strategy in 2006 when the region's economic base of heavy industry was flourishing and development markets were strong.

Then in 2010 the Port Kembla Steelworks halved production, followed by a downturn in the metals and mining industries.

"The underlying issue is that development and demand for housing purchase is cyclical, the estimates were developed at a strong point in the cycle for the Illawarra and were too high," he said.

"I think it's clear misrepresentation of the information to suggest that the Illawarra is substantially behind in meeting residential demand in the past eight years."

Mr Farmer said the report itself stated that, while dwelling approvals had been considerably below target, they were only marginally below actual demand for the Illawarra.