He has welcomed an offer from the Real Estate Institute of NSW-Orana Division to work with Dubbo Regional Council to fix the long-standing problem.

Last week, division chairman Adam Wells said the shortage of new villa apartments, townhouses and units did "not reflect a modern growing city which should offer a selection of housing types".

"If we don't start formulating a plan... there is the potential for people to choose to invest in other regional centres or for people downsizing to go somewhere else," he said.

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On Friday, Cr Shields said it was important for the city and the region to provide "a variety of options to meet the needs of anyone who wants to live here".

"Without that variety, people will look elsewhere," he said.

"It is clear there are challenges within the Dubbo housing sector at the moment and I would be happy to work with the REI to find a workable solution to those difficulties."

The mayor's goal is to make Dubbo the "most versatile and dynamic regional city in NSW".

"However, it is also important that anything we do, especially when it comes to the issue of rezoning, is done with community consensus and I am very keen for the council, REI and the community come together in view to a consensus- driven solution," he said.

"It is critical that the decisions made are done in a transparent and open way and to benefit the whole community so the REI's very public offer is most welcome."

The division previously lodged a submission with the council calling for more choice in housing to accommodate the ageing, downsizers and people who don't want "large grounds".

It also includes sales data reflecting Dubbo's lack of medium-density housing.

In the rolling year to March 2019, 38 units were sold in Dubbo as compared with 206 at Albury, 111 at Orange, 89 at Tamworth, 65 at Bathurst, 58 at Wagga Wagga and 33 at Mudgee, which has less than a fifth of the population of Dubbo.