HIA calls for fast federal housing policy revamp

THE Reserve Bank of Australia announced interest rates on hold for a fourth consecutive month in December, according to the Housing Industry Association.

"Following the last interest rate cut in August it became increasingly evident that the RBA was done for the year; and so that has proven to be the case," HIA chief economist Dr Harley Dale said.

"Australia's rebalancing act with economic growth is only at a nascent stage and the RBA needs to stand ready to lower interest rates further if the economy lacks momentum heading into 2014," Dr Dale said.

"The residential construction industry can be a key driver of the rebalancing of growth given the large reach that new home building and renovations activity has into wider areas of the economy, most notably retail and manufacturing.

"A modest first stage recovery is under way in new housing, aided considerably by very low interest rates, but there is a long way to go to achieve healthy construction levels.

"Meanwhile renovations activity has yet to lift itself from a 10-year low.

"For residential construction to play its traditional lead role in an economic up-cycle, there will need to be a Federal Government-led focus on reforming the inefficient and excessive taxation and regulation of new housing, together with a solution found to the lack of readily available finance for residential development which continues to constrain industry activity."