An economic analyst has suggested the hyped debate over Australia's sustainable population has overshadowed the country's problem on housing shortage.

BIS Shrapnel is rating activity for domestic construction to so sluggish for the new few years, as the effect of the stimulus measures made by the government start to fade.

Jason Anderson, senior economist of BIS Shrapnel, says the present political climate is too concentrated on the population growth of the country.

He suggests it should turn a similar eye on addressing the present lack of supply of community housing which is making affordability problems for Australians.

"There are two parts: you either say that we throw up our hands and we can't get to that point so we need to slow down our population growth, but then we wear the second round and third round negative effects of that on the economy... or we have to do something even more fundamental in terms of trying to enable housing supply," Mr. Anderson said.

BIS Shrapnel's report indicates construction will stay flat from now up to 2012.

Mr. Anderson says that will complicate the present issue of lack of housing, and impact rental costs and housing costs even higher.

"Even though we've had for most of the last 18 months, very favourable interest rates, a very successful scheme in terms of first home buyer demand, we haven't really pushed up towards the level of supply that we need to match it in terms of population growth," he expounded.

Mr. Anderson adds that private firms should put in needed investment to replace the fading government funding impact.

"The first home buyers boost scheme, social housing and education programs have proven to be very effective and they've basically clawed back all the losses," the economist explained.

"We will have definitely a lower rate of public spend coming through even in the next 12 months, and even in the year beyond that."