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New build sector being held back by lack of lending and financial constraint, says HIA

These impediments are preventing some new home building and larger renovation jobs from proceeding, according to the Housing Industry Association, the voice of the country’s residential building industry.

‘The dominant constraints to a sustained recovery in residential construction continue to be found on the supply side. A further tightening of credit conditions for residential development, together with disproportionately high and inefficient taxation as well as excessive regulation of new housing stifle the potential of an inherently efficient component of the Australian economy,’ said HIA chief economist Harley Dale.

‘Lower interest rates are playing a role in creating a more favourable environment for residential construction activity, but Federal government action holds the key to a sustainable recovery,’ he explained.

But if the residential construction industry is to play its required role in rebalancing Australia’s economic growth then Federal leadership is imperative in a range of areas including a reduction in taxation and regulatory costs, increased banking competition, and greater workplace flexibility,’ he added.

He pointed out that there are some encouraging short term signs with a new home building recovery underway in New South Wales and Western Australia. However, it appears unlikely that there will be any growth in national housing starts in 2013.
 
HIA is forecasting a flat year for housing starts in Australia in 2013, although New South Wales starts are forecast to increase by 14% and Western Australia starts by 17%. Growth of 2.5% and 2.8% is forecast for national housing starts in 2014 and 2015, respectively.

The HIA also said that renovations activity endured a disappointing year in 2012, falling to its lowest level since 2002, with weaker levels of home equity restricting finance for renovation jobs.

HIA is forecasting modest growth of 1.9% in 2013 and 2.3% in 2014 which would take the value of total renovations investment to $29.7 billion, around $1.4 billion short of the 2011 peak.

The HIA wants the federal government to address the growing housing affordability challenge facing Australia and to ensure a sustainable residential construction recovery commensurate with the needs of the Australian economy and its growing population.

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