The Housing Industry Association, the nation's biggest building industry association, today released Tasmania's most comprehensive report card on the residential sector.

The HIA says the report highlights a flat year in home building activity in Tasmania which represents a continuation from a plateau 2007/08.

Commenting today on the release of the June 2008 quarter HIA Tasmania Outlook publication, HIA Northern Branch Manager Nick Proud said that while housing starts looked to be falling in the current financial year Tasmania was still a relatively affordable market and this was allowing the State to keep up with demand.

"Having a flat year is not all in itself a bad thing when compared to building activity experienced in less stable building markets on the mainland and especially across the Tasmania in New Zealand.

"To build over 2800 homes consistently and to have a renovations market sitting around $750 million of activity show that, broadly speaking, the Tasmanian industry has again been given a relatively stable prognosis.

"New dwelling starts are forecast to be down by 2 per cent in 2008/09.

"It is important that this trend is arrested in Tasmania in light of stronger population growth and new lows in rental vacancies. Failure to do so will see the state follow the larger states into a much deeper housing affordability crisis.

"Interest rate reductions will, in time, boost confidence and then construction activity, but that's a 2009/10 story.

"We have a relatively inelastic supply side, so no immediate bounce is expected and this is bad news particularly for those searching for affordable rental housing," Mr Proud said.

"We expect the recovery to be modest over 2009/10

and 2010/11 given the lack of skilled labour in the industry and the long road ahead in lifting housing affordability to reasonable levels."

Mr Proud said the the renovations sector has been strong over the past 3 years, growing by 15 per cent, HIA expects a flat outlook over the next 3 years.