The gap between supply and demand increased by 28,200 to 186,800 units this year in the housing sector, the (NHSC) National Housing Supply Council report reveals.

The report shows that NSW and QLD carry the greatest shortfalls of 73,700 and 61,900.

The report predicts the gap could grow to more than 640,000 homes in the next 20 years based on household growth and current building trends.

Owen Donald NHSC chairmen said more government financing for housing for low-income earners and financing support, along with changes to planning and development approval, could boost supply and affordability.

“Existing demand-side measures like the first home owners grant and commonwealth rental assistance could also be re-examined with a view to having a more substantial impact on housing supply and affordability,” Mr Donald said in a statement.

Housing Industry Association CEO Mr Graham Wolfe said excessive and inefficient taxation and land supply remain high priorities for change. “Taxation, levies and charges on a new house-and-land package can be in excess of 40 per cent of the purchase price,”

“Independent economic modelling shows that the taxes on a new home are often in excess of the price of the land.”

Mr Wolfe said access to land for development was a problem, and all levels of government should tackle the availability and affordability of housing for Australian families.

Newly appointed Housing Minister Robert McClelland said the report highlighted the need to address the inescapable fact that growth in underlying demand for housing was outstripping supply.

“The report confirms that access to affordable housing is a challenge for many Australians,” Mr McClelland said. “We need to make sure housing supply matches the needs of our changing populations.”