Australia home building 'won't meet demand'

House building in Australia is not keeping pace with demand – which means house prices could continue to rise.

Speaking to Bloomberg, BIS Shrapnel economist Jason Anderson claimed the construction of new homes in Australia is being hampered by lending constraints and government regulations.

He noted that despite an expected 21 per cent increase in the number of new houses built in the year ending June 2010 – compared to last year’s figures – the 159,000 new houses to be erected in the country will not meet demand, which will top 200,000.

"At the moment there’s a relatively long lag between demand and rate of construction," he told the news provider.

Adding: "We don’t think the numbers will decline from here, but the really big rise we need hasn’t come through."

According to a recent Australian Property Monitors report, property prices will continue to climb as incomes rise and housing demand exceeds supply, reports the Associated Press.

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