Despite a slew of upbeat data pointing to the nascent recovery in property sector, the Housing Industry Association (HIA) has warned this revival could be curtailed unless the government acts urgently to address the country's worsening affordability crisis. In its quarterly housing report card, HIA's executive director of housing and economics, Simon Tennent said the record low affordability is a threat to the full recovery in the property market and cautioned against the risks of further interest rate increases. "For the immediate future, any further interest rate hike in mortgage rates in 2007 will derail the chances of recovery in the short term and dampen the flow of private investment in rental housing which remains 30% below its peak," he said. He added that steady rates, together with a concerted effort on the part of all levels of government to address the crisis in affordability, would allow for a slow return to growth for new housing that should pick up momentum over 2008/09. Tennent also warned that with affordability stuck at record lows, Australia is facing another two years of below par levels of home building which would further squeeze the already tight rental market. "Based on the latest population and immigration numbers, Australia needs approximately 160,000 new homes added to the stock each year, which sadly is a level we have not had since 2003," he said. "This build up in unmet demand has not let up in 2007, with tightening rental markets putting added pressure on the existing stock of dwellings - as demonstrated recently with established prices rising in all cities except Sydney."