The Housing Industry Association (HIA) said that the recovery in new home building is getting "bogged down" in the bureaucratic maze of the building approvals process.

HIA Chief Economist, Harley Dale, said that while a raft of leading housing indicators supports a recovery in new housing starts, since November last year (to July 2009) the number of loans to construct a new home has increased by 59 per cent, but local government permits to build houses has only increased by 20 per cent. "In 2009 the new home building recovery is being slowed down by a log jam at the planning stage. Consequently, there is a disconnection between finance to build homes and the number of local government permits," Dr Dale said.

"This situation stands in stark contrast to the experience in 2001 when the doubling of the First Home Owner Grant for new dwellings translated into a strong surge in both finance and building approvals which was quickly reflected in a rapid up-turn in housing starts," he said.

"The likelihood is that housing starts will fall below the 130,000 mark in 2009, a decline of 13 per cent. That will be well short of underlying demand for new housing, which is running at around 190,000 dwellings per annum," Dr Dale said.

8 October, 2009