Despite posting a modest increase in housing starts, the outlook for the new financial year remains sombre.
According to Australian Bureau of Statistics (ABS) data released yesterday, housing starts increased by 4.3 per cent in the March quarter.
However, detached house starts dropped 2.1 per cent, suggesting that the strong run up in building approvals through to early 2010 is not translating into new home starts as quickly as needed.
"The conversion rate for approvals to starts fell below the long term average to sit at 94 per cent in the March quarter," Housing Industry Association chief economist Dr Harley Dale said.
"The unjustifiably tight credit conditions for residential development, uncertainty about the magnitude of rate rises in 2010, and some approvals simply being reissued with no firm plan for commencement all contributed to what is overall a soft first quarter update for new home building," Dr Dale said.
"HIA continues to expect a relatively healthy rise in housing starts in the 2009/10 financial year, albeit off a very low base.
"However, a positive outlook for 2010/11 and beyond is far from assured amidst considerable supply side obstacles which in this cycle have been added to by a dire lack of available finance for development," he said.