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Fall in building approvals show housing decline not over

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The dow nw ard trend in the residential building industry looks to be continuing, with O ctober building approvals showing a decrease o f 8 percent (seasonally adjusted). This follows Septem ber’s grow th figure o f 4,5 percent,

RE1A said today these figures were disappointing and demonstrated that the effects o f last year's interest rate increases on the housing sector were yet to fully dissipate,

H ousing has carried a disproportionate share o f the load in terms o f the G overnm ent’s strategy to slow the pace o f economic grow th over the past ten months.

Y esterday’s release o f G DP figures showing a V6 percent increase, whilst m eeting the G overnm ent’s own sustainability criteria, has been achieved at the cost o f a severe and on-going contraction in housing and related industries.

Already the implications o f this over-reliance on monetary strategy have been felt with recent data showing a halt in the decline o f the unemployment rate,

As well, public housing queues are still growing coexistent with substantial regional housing oversupply suggesting a serious housing affordability problem,

Both the Governm ent and Opposition should therefore be aware o f the selective impact o f interest rate increases as a tool o f economic policy.

The lessons o f the past year should prompt a more imaginitive response to the m anagem ent o f econom ic grow th and the best alternative remains a commitment to reducing governm ent debt

The next priority for governm ent will be to develop strategies by which it can overcom e the growing structural mismatch between demand and supply in the housing market,

The Inefficiencies inherent in devoting billions o f dollars to public housing, whilst the private m arket - flits Stalled, is a problem that requires urgent attention. It should be the main focus o f the

■ G overnm ent's soon to be announced Housing Statement and o f the O pposition's yet to b e released housing policies.

For more Information; Keith Conley Policy and Public Affairs 06 282 4277 (w) 06 249 7 1 5 9 (h )

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