Residential renovations accounted for nearly $31 billion worth of work last year, the highest level in four years.

That was according to the HIA National Outlook, Australia's most comprehensive quarterly report card on the residential building industry.

The report also forecasts growth of two per cent in 2011/12 and five per cent in 2012/13, taking renovations activity to a worth of over $33 billion. That would be close to a record high, according to HIA chief economist, Dr Harley Dale, who said the renovation side of things looks in "relatively healthy shape".

"We expect activity in the renovations sector to hold largely steady this financial year, which would be a good outcome,” Dale said.

However the HIA National Outlook also outlines the extent of the expected drop in housing starts this year.

Housing starts are forecast to fall by 15 per cent to a level of 143,430 in 2011.

The HIA says the weakness in new home building since mid-2010 is exacerbating housing shortages and requires urgent attention from federal and state policy makers.

Dale said: "Housing starts have only increased in two of the last ten years. This fact delivers a very poor scorecard on new home and rental market affordability which especially hurts aspiring first home buyers and lower income households."

"The housing supply crisis is upon us now and without proper leadership from the Federal Government it is only going to escalate."

  • The HIA has called on the Federal Government to:

    - immediately introduce stimulus measures to boost new housing in recognition of building levels in 2011 that won't be much higher than the 2009 GFC-affected level;

    - appoint a minister whose sole responsibility will be remedying Australia's housing shortage crisis and ensuring we maintain an adequate supply of new housing in the years to come;

    - include as an agenda item at the October taxation forum the examination of how best to decrease the exorbitant taxes, charges and fees that are currently levied on housing;

    - not impose any new taxes (including a carbon tax) that have an impact on the cost of new housing; and

    - resume concrete action to reform the supply side of Australia's housing market, including assisting states to remove stamp duties on new homes and removing planning and development bottlenecks.