On a seasonally adjusted basis, total building approvals fell by 6.5 per cent, more than reversing a 5.4 per cent rise the previous month.

In the state of Queensland alone building approvals fell by a staggering 21.8 per cent.

Overall, the number of detached house approvals eased by 0.5 per cent, while the more volatile multi-unit segment was down by 18.8 per cent.

Housing Industry Association chief economist, Harley Dale, said that it was time state and Federal governments got serious about reducing the fees, taxes, charges, and planning delays that are adding unecessarily to the cost of new homes.

“While the poor approvals result for May was largely driven by a very poor month for Queensland (take out Queensland and approvals were flat), it is still a weak update for new home building,” Mr Dale said.

“In 2008 to date building approvals have consistently been trending down in six of eight states and territories, the exceptions being South Australia and Tasmania,” said Mr Dale.

“HIA research identifies the requirement for an additional one million homes to be built in Australia over the next five years to plug the underlying demand gap. The renewed weakness in 2008 for leading indicators such as building approvals highlights the lack of progress in boosting production to begin reducing the acute housing shortage,” added Mr Dale.

On a state by state basis the number of seasonally adjusted building approvals in May fell by 21.8 per cent in Queensland and by 3.7 per cent in Western Australia. Approvals increased by 7.8 per cent in South Australia and were up by 2.8 per cent in Victoria, 1.4 per cent in Tasmania, and 1.1 per cent in New South Wales.

The trend in building approvals fell by 7.4 per cent in the Australian Capital Territory and by 6.4 per cent in the Northern Territory.