Australia has 200,000 more homes sitting empty than it had a decade ago, new figures show, despite the country grappling with a housing supply shortage that is pushing the cost of a first home beyond many of its residents.

The figures from the 2016 census have been described as "cruel and immoral" by leading UNSW urban policy expert Hal Pawson, who has warned the government must act to stem the growth in unoccupied housing.

"There is gross under-occupation across Australia," Mr Pawson said, adding that there were up to a million homes with three or more extra bedrooms than the owner required.

"There is a growing realisation that our housing market is not working well. It doesn't just create a problem for people on low incomes, it also hurts spending in the economy when housing is overvalued."