The property market gains of 12.5 percent for new housing in the June quarter could take a slow down over the medium term.

According to Housing Industry Association (HIA) senior economist Andrew Harvey, the increased consumer buying was a direct result of the government grants in 2009 for new homes.

Harvey emphasized, “You need to remember that the housing contribution to June quarter Gross Domestic Product (GDP) reflects the lagged effects of good approvals and lending finance figures from the latter stages of 2009.”

The HIA economist claims the situation has changed. For one, the uncertainty over the National Broadband Network deal is keeping Telstra and property developers from entering into new housing construction projects.

Harvey said, “Without the government stimulus of the first home buyers boost and the social housing initiative we have seen a sustained weakness in approvals and finance, signaling that new housing construction will at best be flat over the medium term.”

The June quarter figure is 8.3 percent higher than 12 months ago. For the financial year 2010, new housing expenditure is 1.4 percent less than the financial year 2009 figures.

The HIA reported a 2.4 percent drop in expenditures on alterations and additions during the June quarter. The decrease is 14.9 percent higher than 12 months ago. Harvey insisted the falling figures suggest the property market is close to reaching the finish line of an active renovations sector.