Latest NewsHomebuilding Recovery to Stall : HiaMonday, 13 February 2017

Renters and would-be buyers will find little relief in coming years as the house shortage persists.

The recovery in the residential construction industry needed to relieve Australia's 200,000 house shortage will most likely stall next year as rising interest rates and a slump in demand take their toll, a housing lobby group says.

Housing starts, a leading indicator of construction, are expected to jump by 20 per cent in 2010 but drop by 3 per cent in 2011, bringing limited relief to house hunters, the Housing Industry Association said.

Total quarterly dwelling units rose 4.3 per cent in the March quarter, following a 16.8 per cent surge in the December quarter, official data show.

''Australia needs to build over 190,000 dwellings in 2010 alone to meet underlying demand and over the next ten years we need to build 420,000 dwellings more than we built over the last decade,'' said HIA chief economist Harley Dale.

The spurt in housing construction was fuelled in part by the federal government stimulus, enacted in response to the global financial crisis in 2008.

The economy's rebound, though, has prompted an about-face in the Reserve Bank's monetary policy, with the central bank lifting rates six times since October from 50-year lows to keep prices - including real estate - in check.

''If the current recovery peters out as soon as the positive impact from past stimulus has gone, then the pressure on renters and the wider entry level market will intensify further,'' said Mr Dale.

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