A new property industry study has revealed on Tuesday that Melbourne is fast gaining traction as the country's economic powerhouse and could eventually dislodge Sydney as Australia's largest city come 2037.

According to ABC, the Going Nowhere report said that Sydney has been skidding in terms of economy, population and investment attraction, as the Urban Taskforce cited reports that about half a million more people were residing in Sydney than there were in Melbourne in 2009, as compared to the 600,000 Sydney population back in 2002.

The taskforce's Aaron Gadiel said that Victoria has outperformed New South Wales and Melbourne is now well-positioned to overtake Sydney by 2037 with a population growth of 1.3 percent every year.

He said that Sydney is suffering from housing shortage and the NSW government must expedite efforts to double home constructions to arrest its decline, as he stressed that "the Metropolitan Strategy Targets should be met as they're the base level numbers that we need to meet if we just need to keep our economy and our community ticking over on an even keel."

Mr Gadiel said that housing shortage is an important indicator of the state's ability to sustain economic and population expansion, adding that people's activities fuel the economy and housing is the one thing that holds everything by creating job opportunities and attracting people into an economy.

He said that Victoria is poised to dominate further in spite of lacking the resources enjoyed by Western Australia and Queensland but boasting an average economic growth of 3.3 percent from 2003 to 2009 and job growth of 2.1 percent per annum.

Mr Gadiel pointed to NSW as the weakest link among all Australian states with a mere 0.8 percent of economic growth per capita, though ABC said that Access Economics has also reported today that the New South Wales economy is showing signs of improvement but at the same time, it issued warning that spikes in interest rates and slow commercial construction activities could lead to a sluggish recovery.