There was an improvement in housing finance in the year to October 2010, with the total number of seasonally adjusted loans increasing by 1.7 per cent.
But while loans for new housing construction picked up, the urgent need for governments to address supply side policy failures remains, according to Master Builders Australia (MBA).
MBA chief economist Peter Jones says: "Despite recent signs of stabilisation, any improvement in housing finance is likely to be shortlived as the impact of the latest rate rises flows through."
"Notwithstanding another small headline increase in October, the total number of finance commitments is barely doing better than tracking sideways following a 25 per cent fall during the past year."
"Housing finance related to new dwellings, that is, for construction or purchase of newly built homes, is not growing at all in trend terms."
He adds that a lack of finance is acting as a handbrake on the industry as the credit squeeze remains operative.
"Builders have reported an across the board slowing in sales, including sharp declines in some states."
"Unless there is urgent reform to address bottlenecks, the strong supply response needed to meet demand will not eventuate, with dire consequences for housing affordability."
