Ballarat is looming as the likely favourite to host the track and field events, which would be a major boom for the city but require significant housing infrastructure.

Federation University professor of housing economics George Earl said while it meant new development in the regions, planning was critical to the Games leaving a positive legacy.

"Four years is actually quite a short time, especially if you've got some major infrastructure that needs to be developed," he said.

"It's a question of what existing facilities you have and what you're going to need and as a consequence, what sort of budgets, timelines and what sort of facilities would need to be provided as you lead up to those games."

While the Games' host remains unconfirmed, the state government this week announced it was in exclusive talks with the organising body, and if successful, a majority of events would be held regionally.

Homelessness, lack of affordable housing, and rental availability issues have been compounded by the COVID-19 pandemic in both urban and regional cities.

Australian Housing and Urban Research Institute managing director Dr Michael Fotheringham said over the past 12 months in particular there had been a tightening of regional housing markets with migration patterns "grinding to a halt".

"Instead of moving from the regions into the big cities, people are staying now, that swells the population, and when you've also got some outflow from the big cities you've got a growing population," he said.

"For centres like Ballarat, which is commutable from Melbourne, that's where it plays out most strongly."

The residential vacancy rate for rentals in Ballarat last month was 0.8 per cent, compared to 2.2 per cent at the same time in 2020.

The vacancy rate last peaked in Ballarat at 5 per cent in 2009.

Dr Fotheringham said it was important to look at the infrastructure the Games would deliver in the context of existing projects like Victoria's Big Housing Build.

The project saw a $1.25 billion investment announced for regional Victoria last year, including $80 million for Ballarat housing builds.

Australia has historically been successful after international events in implementing infrastructure for use by the population, with Dr Fotheringham pointing to the 1956 Melbourne Olympics that saw the athletes village used for public housing as an example.

"Certainly the international experience has seen some fairly shoddy makeshift accommodation put up for the games - it really doesn't have a life span beyond those games, and that's a trap," he said.

"It's one that I think this government is alert to and Australia has had a pretty strong record ... the trick is producing housing that is useful to the resident community after the Games."

City of Ballarat chief executive Evan King said the Commonwealth Games were an opportunity to advocate for legacy housing projects that could be accelerated because of Games investment.

"The City of Ballarat is aware of house prices continuing to increase in Ballarat and is aware of how important it is to continue to have stock available at all levels of the market," he said.

"We have seen from previous Commonwealth Games held in Australia that accommodation built for athletes can provide legacy benefits for a community and can result in housing stock that is higher density, more affordable, with communal infrastructure," he said.

Ballarat has previously banded together with other regional centres across the state in a campaign to host the Commonwealth Games in 2030.

While the event may arrive sooner than hoped, Professor Earl said it was unclear if migration patterns would reset by the time the Games begin in 2026, and a strong regional housing policy was needed to address issues now.

"[Governments] tend to focus on big cities, and leading into the upcoming federal election, I think there's gonna be some hard discussions around regionalism," he said.

"I think that's a positive because it's about time that we realise that we need to have a very strong regional policy in Australia."

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