THE Australian population is growing at its fastest pace in almost 20 years, prompting claims by developers that a housing shortage will only intensify.

The national population reached 21.4 million in June, after growing by 1.7 per cent over the year - the highest rate since 1989. Historically high rates of migration and the healthiest birthrate since 1981 are driving the increase.

The growth was spread relatively widely across the country. While NSW's population growth was the country's second slowest - ahead of Tasmania - it nevertheless grew by more than 1 per cent. Western Australia, Queensland and the Northern Territory were the fastest growing states and territories, according to the Bureau of Statistics report published yesterday.

The figures strengthen housing industry claims that the financial turmoil will exacerbate a shortage of houses in big urban centres.

In its latest Outlook report, published yesterday, the Housing Institute of Australia said that the number of new houses built next financial year would fall about 7 per cent.

The chief executive officer at the developers' lobby Urban Taskforce Australia, Aaron Gadiel, said while yesterday's 1 percentage point rate cut would offer some relief for the industry, developers were being hit hard by banks reining in lending.

Apartment developments in NSW were in a particular bind, Mr Gadiel said.

Developments of apartments and townhouses tend to be dependent on project finance from banks - and approvals for these types of dwelling have fallen 48 per cent in a month.

"NSW may lose a large number of projects currently in the pipeline if the banks continue their current program of credit rationing," Mr Gadiel said.

"NSW has little hope of meeting employment, housing and growth targets without a strong series of projects coming through the development pipeline."