The Housing Industry Association (HIA) is anticipating a sluggish development in new home building by next year as it cited that the government's slow progress in releasing more lands and the dwindling availability of funds for real estate developers are tempering fresh housing initiatives.

HIA said that it is expecting a decline of up to three percent on new housing by next year as its chief economist, Harley Dale, warned that a big part of Australia is poised to bear the brunt of housing shortage should finance availability be further withheld from residential builders.

Mr Dale lamented that the current situation is not promising as he urged the government to provide a definite timeline for the condition to improve lest the dismal set up "is going to present an ongoing obstacle to boosting the supply of new housing in Australia at a time when we have a considerable and growing shortage."

He said that lenders at this time are viewing the whole construction industry into a single panorama, which should not be the case as "there needs to be a closer scrutiny taken perhaps of some differential consideration given to different aspects of the construction industry."

Mr Dale said that it would be prudent for the lending industry to assess the housing sector on a case-to-cases basis, "where perhaps, some residential projects and the viability of those projects needs to be judged somewhat differently to larger more commercially oriented projects."

On a positive note though, the HIA is projecting that the construction sector is set to start and work on 20 percent more home projects this year as compared to housing units started on the previous year.