Young families wanting new stand-alone houses are expected to drive a boom in residential construction in the next three years.
Construction of more than 200,000 new homes is expected to begin between July 2014 and July 2017, the Master Builders Australia association is forecasting.
About 120,000 of those are expected to be detached houses and 80,000 apartments.
Master Builders chief executive Wilhelm Harnisch says detached houses are expected to steadily lift from about 93,000 to 99,000 by the end of year before peaking in 2016/17 as confidence in the economy picks up.
Fuelling the demand for new suburban homes will be young families wanting space for their children.
"There's a huge undersupply of housing and we've got significant population growth," he said.
"While there's been a big increase in apartment living, statistics still show a significant number of people prefer to live in detached housing.
"It's that part of the housing sector that's playing catch up as confidence is starting to grow and the pent-up demand will be realised in actual activity."
Meanwhile, economic forecaster BIS Shrapnel is predicting new housing starts to reach 190,000 during 2014/15.
This is greater than the 1994 home construction boom, which saw nearly 187,000 new housing starts, BIS Shrapnel's associate director Dr Kim Hawtrey said.
"In the next two years we'll also see the recent emphasis on high-rise units continue," Dr Hawtrey said.
"Currently two high-rise apartments are being built for every five detached houses, which is double the historical rate of one apartment for every five houses built."
He said Australia's population was growing at a rapid 1.7 per cent annually, which was among the fastest in the developed world.
"Home building has been punching below its weight for about a decade, and has not kept pace with population growth for some time now," he said.
"We estimate that it will take the next five years to eliminate the unmet demand for housing."
He said investors and upgraders and downsizers were driving demand, while first home buyers are still largely on the sidelines.
NEW HOME FORECASTS FOR THE NEXT THREE YEARS:
*NSW - 56,911
*Vic - 55,655
*Qld - 41,644
*WA - 26,164
*SA - 12,087
*ACT - 3,517
*TAS - 2,550
*NT - 1,981