New home building approaching recession: HIA

Despite the fact that new home sales increased by 6.9 per cent in April, HIA chief economist Harley Dale said the government had a lot of work to do.

"Even with this latest improvement, the aggregate volume of both new home sales and local government building approvals imply that in the absence of a rapid and sustained recovery, national new home building is heading to a recessionary level in 2012,” he said.

“That’s an unfortunate fact which everybody needs to face and which requires further interest rate cuts and immediate government action."

The bleak outlook, however, is not shared with Federal Treasurer Wayne Swan, who earlier this month noted Australia’s fiscal strength.

“In uncertain times, we live in one of the strongest economies in the developed world… [The budget] will make sure economic prosperity in the future is ensured.

“Australia’s economic fundamentals are strong, and we will make sure they stay that way.”

However Mr Dale believes actions speak louder than words, and the figures don't match up to the Treasurer's claims.

“We keep hearing that Australia is one of the world’s strongest economies," he said.

“That’s a redundant concept if people on the ground aren’t feeling and experiencing that, and they haven’t been for quite some time.

"Further interest rate cuts are required and the Reserve Bank should just get on with the job on June 5th."

“The key to a housing recovery lies with governments at all levels. Job losses are mounting and governments need to collectively act to revitalise new home building through reducing the sector’s excessive tax burden and through an immediate injection of investment and funding.”