Home building still slow

Australia’s building industry is still weak, with new home construction falling well below the needs of the nation’s growing population.

The  Bureau of Statistics reports that – overall – loans for new housing fell by 0.2 per cent in May to a level 20 per cent below that seen six months earlier.

Graham Wolfe, the Chief Executive of the Housing Industry Association, blames a spate of interest rate rises and tight credit for the problem.

Interest rates have been increased in six of the past nine months.

The Association estimates that Australia needs to build 190,000 new homes each year,  just to keep pace with its growing population.

However it says  that a bare 166,000 will be built this year.

“Impediments to a sustained housing recovery must be removed if we are to have any chance of supplying sufficient new housing to meet demand,” Mr Wolfe said.

He said upward price pressures were also affecting the market.

The housing industry chief said the latest figures should convince the Reserve Bank that there should be no more interest rate rises later this year.

Both the value – and the number – of new housing commitments have been falling sharply, over most of this year.

They still are, on trend figures.

However, on seasonally adjusted figures, the value of home building commitments rose by 0.7 per cent during the month.