Master Builders Association of Victoria executive director Brian Welch said the average time to get a housing approval from Melbourne councils was 18 weeks.

In a letter to the editor, he said the lag was due to local government bureaucracy, but the delay and high demand for housing were driving up costs for buyers.

"The greatest problem we face is the conversion of rural land to residential-zoned land. It takes five years, which is an incredibly long time."

Mr Welch said it was imperative that Parliament passed legislation to increase Melbourne's urban area, including large parcels of land in Melton Shire, to make room for the state's booming population and to get a handle on a housing affordability "crisis".

"Victoria's population is growing by 1200 people a week. If we are to successfully house a larger population at affordable prices, then the planning system must be fixed."

Melton Council approved construction of 1032 houses in the first half of the 2009-10 financial year, compared to 1099 in the same period the year before.

Planning manager Bob Baggio said council had to make a decision on planning applications within a 60-day time frame or the applicant could go to VCAT.

He said conversion of rural land to residential could be time consuming because council had to prepare a master plan for the area that needed State Government approval before construction could begin.