With international borders closed for much of 2020 and 2021, NSW saw a flip in population trends as internal migrants left Sydney and moved to regional areas along the coast.

While the population of the Illawarra increased in the 12 months to July 2021, the region was outpaced by the Far South Coast and the Hunter, as well as the Mid North Coast and Northern Rivers.

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According to RDA Illawarra, the attractiveness of other regions means that the Illawarra is missing out on workers to fill staff shortages as the region reaches almost full employment.

"The unemployment level in the Illawarra has fallen to 2.6 per cent against a background of no overseas migration over the past two years," RDA Illawarra CEO Debra Murphy said.

"The region is at the point where we will have more jobs than people to fill them, and we need to attract more workers."

Population growth in the Illawarra, and in the Wollongong LGA in particular, has historically been driven by overseas migration.

In the years prior to COVID, Wollongong was welcoming over 2000 international migrants per year.

This dramatically dropped when borders were closed, with Wollongong experiencing a net loss of international migrants in 2020-21.

While natural population growth increased - i.e. more babies were born and fewer people died - this did not outweigh the loss of population growth from international migration.

At the same time as population growth slowed, more people were finding work than ever.

From an unemployment rate of almost nine percent in the Illawarra in January 2020, the number has fluctuated the years since but generally fallen, reaching a low of 2.6 in February 2022.

During this time the participation rate - the number of people in or looking for work - has remained steady at about 60 per cent and youth unemployment has also fallen, from over 25 per cent in January 2020 to 4.2 per cent in February 2022.

With the Illawarra's economy roaring back to life and businesses seeking to hire more workers, the lack of international migration and the Illawarra's relative unattractiveness compared to other regional areas could put the brakes on the region.

As thousands leave Sydney for regional areas, sea and tree changers are choosing regions elsewhere in NSW.

From 2018 to 2021, the Illawarra absorbed 1853 internal migrants, while the Far South Coast gained over 2500 and the Hunter over 8000.

The Mid North Coast and the Northern Rivers also welcomed more migrants in total, while the regions of Murray and Southern Inland saw a greater number of migrants arrive than the Illawarra as a percentage of the estimated regional population.

According to Ms Murphy, a key impediment to sea changers choosing the Illawarra has been the region's unaffordable housing market.

"While it probably comes as no surprise to home buyers, our research indicates that the Illawarra has the highest median property prices outside Greater Sydney - followed by the Central Coast. It is little wonder that people are relocating further afield - especially if they have flexible working conditions," she said.

Not only are property prices high for those looking to buy, the median rental in the Illawarra is the most expensive of any region in NSW.

Wollongong MP Paul Scully said on top of high house prices, those moving to the Illawarra from metropolitan areas such as Sydney were paying the same prices but finding a different level of service.

"If you are - for instance - buying a $1 million place in West Dapto, you would expect there to be a transport system equivalent to a $1 million place in Southwest or Western Sydney," he said.

"At the moment, given our public transport system is so focused on moving people out of the Illawarra and into Sydney, our internal transport system doesn't match."

The Illawarra-Shoalhaven Regional Transport Plan identifies the need to increase the population within a 30 minute public transport trip from a regionally significant centre, as well as improved connectivity with greater Sydney.

Currently, 68 per cent of residents live within a 30 minute public transport trip from a regional centre during the peak morning period, with the number falling to 51 per cent on Sundays.

Mr Scully said reducing travel times could lift the region's participation rate to be more in line with the national figure.

"A good start would be for the government to finally release the faster rail report that it's been clinging to since 2019, so we can all have a look at what the challenges are to improve transport, particularly public transport, within the Illawarra."

In the long term, a similar focus on skills and training will be needed to ensure that the Illawarra has the right people for the region's growth.

"There is a need to seriously invest in training, otherwise, as a region, we're going to be artificially limited in our capacity to grow," Mr Scully said.

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