Housing demand is set to soar across the country’s four most-populous states over the next two decades fuelled by a predicted 7.4 million national spike in population, analysis by PEXA-owned Informed Decisions shows.

Victoria is poised to rack up the largest increase in population with 2 million people to be added by 2041.

NSW is set to rise by 1.7 million, Queensland by 1.6 million and WA by 904,000, spurred by strong migration.

Tim Lawless, CoreLogic research director, said housing markets in those states would benefit from the strong population growth, which could support price growth.

‘‘Population growth is a proxy for either rental or purchasing demand because all these people are going to need a roof over their head,’’ he said.

‘‘So it will provide a fundamental driver enhancing prices unless you see an appropriate supply response.’’

Australia’s population is expected to increase by 2 million people to 27.7 million by 2026.

It will increase to 31.3 million by 2036 and jump to 35 million by 2046, or about 420,000 people per annum.

Ivan Motley, founder of .id, a wholly owned subsidiary of PEXA, the ASX-listed e-conveyancing platform, said population growth was a key driver for housing supply.

‘‘People go where there is somewhere to live,’’ he said.

‘‘Clearly there’s a shortage of housing and the lack of affordability, so we need to increase supply to address that.

‘‘At the moment we’re not building enough dwellings to maintain stable vacancy rates and average household sizes.’’

Melbourne is forecast to add 1.6 million people during the same period, outpacing Sydney’s predicted population growth of 1.2 million.

Brisbane’s population is set to increase by 974,000 while Perth is expected to gain 979,000.

To meet the housing demand for those increases in population, an estimated 723,000 homes would be needed across Melbourne.

Sydney would need an additional 582000.

Across Brisbane, an extra 381,000 homes are required while Perth would need 334,000.

Melbourne’s west, south-east and the inner city are forecast to post the strongest population growth, with nearly a million people set to be added in the next two decades.

The combined population growth, which accounts for 46 per cent of Victoria’s overall population growth, will require 422,000 additional dwellings.

Within these regions, population growth is concentrated in certain suburbs such as Truganina, Mickleham and Cranbourne South.

Arjun Paliwal, head of research at InvestorKit, said Melbourne was ripe for solid house price growth in the medium-to-long term.

This was boosted by increased demand from strong population growth and its lacklustre performance in the past few years.

‘‘I think investors should position themselves in areas like Melbourne because having a lower period of price growth in a city that usually has a history of strong growth can actually be a good sign,’’ he said.

‘‘Prices have not grown much over the last few years, so they will start to look more attractive.

‘‘We’re also seeing rental growth really pick up, and it’s clear that the rental supply isn’t there, so cash flow will be more palatable.’’

In Sydney, suburbs in the southwest, Blacktown, Parramatta and the inner city are predicted to rack up the strongest population growth over the next 20 years.

An additional 572,000 people are poised to move into those areas which would require an additional 267,000 dwellings.

Meanwhile, the report predicts new housing supply could be built in River-stone, Penrith, Leppington, Campbell-town, Gilead, Parramatta and Sydney city during the same period.