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Australia takes aim on housing shortage

Hopes to kill two birds with one stone by fixing housing shortage and boosting construction industry.

The Australian Reserve Bank is hoping to fix the housing shortage and drive growth in the construction sector at the same time.

Housing is the ideal target for the beleaguered construction industry due to the chronic shortage of homes, but some warn that high costs, low investment and too much red tape will get in the way of this being a successful strategy.

OECD economist Christophe Andre told ABC that the country needs to do more to tackle its transaction costs, which account for nearly 14 per cent of the value of property.

However, he also pointed out that investment is too low, and has been flat for almost a decade. By comparison Canada, which has a similarly sized resource-based economy has seen housing investment increase.

“You need to build more homes to restore affordability," Mr Andre said.

"Probably one key thing is to streamline the planning system and probably the second thing is also to reduce the development charges that are hampering development in Australian cities."

Nevertheless, the property market is showing some signs of growth, with homes largely considered more affordable than they have been and low interest rates tempting buyers.

Posted by Steve Douglas

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