Limits on the supply of new housing will mute the home building recovery over the next three years, according to the Housing Industry Association (HIA).
Although housing starts are expected to increase by 9 per cent over the coming year, HIA chief economist Dr Harley Dale said this increase is simply not enough to meet the surging demand for new properties.
“The issue confronting the housing industry is not a shortage of demand but rather supply side constraints caused by bottlenecks in the availability of serviced urban land and a shortage of suitably skilled tradespeople,” Dr Dale said.
“These barriers played a big role in generating the longest decline in new home building in Australia’s post war history where 2009 will mark the seventh consecutive year of weakness in housing starts.
“These same constraints run the risk of causing even more economic and social damage over the next few years, and that is before we face the challenge of building the more than six million dwellings that will be needed over the next 40 years to match Australia’s projected population growth.
“Failure to address the obstacles to boosting Australia’s housing supply will lead to damaging bouts of house price inflation and the imposition of a higher interest rate structure than we would otherwise experience.”