Soaring house prices are forcing young Australians to live at home longer or share houses rather than buy a home, a lobby group says.

The Federal Government's State of Australian Cities report looks at trends in the nation's 18 biggest cities.

The report shows that young city dwellers are taking longer to fly the nest and highlights how unaffordable housing has become, the group Australians for Affordable Housing said.

Campaign manager Sarah Toohey called on the Federal Government to implement a national housing plan.

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"With a federal housing minister, and a national housing plan to address these sorts of trends ... we would be able to make changes to improve our broken housing system," she said.

Sydney has the biggest gap between housing supply and demand, but overall, Australia has a shortfall of 200,000 new homes, the report says.

It found Melbourne was growing faster than Sydney, gaining more than 600,000 people, against Sydney's 450,000 increase, between 2001 and last year.

- AAP