New home building has been hampered by high interest rates and excessive taxes.
New home building has been hampered by high interest rates and excessive taxes.

'Taxes and interest rates slow building'

EXCESSIVE taxes and high interest rates are constraining housing starts across the country, the Housing Industry Association argues.

The HIA released its autumn update to its national outlook on Wednesday, forecasting a 5.9% fall in housing starts for 2012 after a 12.8% decline last year.

After the Reserve Bank of Australia left the cash rate on hold at 4.25% on Tuesday, HIA senior economist Andrew Harvey said a combination of factors were stifling growth in the construction sector.

"New home building has been hampered by interest rates that have been too high for too long as a glacial pace of reform in terms of the supply-side of the Australian housing market," Mr Harvey said.

"Put simply, the excessive tax levied on new housing is constraining supply and is harming business conditions and therefore the wider economy."

The outlook also forecasted that housing starts would bottom out at a level 137,820 in the 2011-12 fiscal year before a mild recovery to 151,200 by 2013-14.



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