The federal government of Australia should push for policies that will support the residential construction sector to help the economy weather the impacts of the COVID-19 outbreak, according to the Urban Development Institute of Australia (UDIA).

Simon Basheer, national president of UDIA, said housing construction is a "central pillar" of the economy, contributing 7.5% of the overall growth and supporting 750,000 jobs.

"The advice so far is building sites can remain open and the industry will play its part in sustaining work and activity as long as it is healthy and safe to do so," he said.

UDIA laid out six recommendations that could help support the sector achieve a swift recovery. These recommendations lean on and expand existing policies and initiatives.

"Australia's residential development sector is traditionally well-capitalised, resourceful and able to move quickly once the barriers to commencing projects are removed," Basheer said.

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The first recommendation is to release the second tranche of the First Home Loan Deposit Scheme. The scheme helps homebuyers break into the market with as little as a 5% deposit.

UDIA said the expected 10,000 slots for the scheme should be released as soon as possible and should be exclusively provided to those who intend to buy new houses.

UDIA also proposed a policy that would clear the backlog of projects under assessment via the Environment Protection and Biodiversity Conservation (EPBC) Act.

UDIA also recommended that the government to accelerate investment in infrastructure projects, especially those that can support new urban development.

Also included in UDIA's proposal is the implementation of an incentive for state and territory governments to reduce the timeframes for major project approvals. At the same time, this policy also includes the removal of regulatory barriers to shovel-ready housing projects.

The fifth suggestion is to ensure the continuous flow of credit.

Lastly, UDIA said it is crucial to expand stamp-duty exemption schemes, roll back barriers to foreign investment, and boost build-to-rent. These will help underpin new land release and off-the-plan stock.

"Industry values the broader economic stimulus governments and regulators have already advanced to maintain liquidity, boost cash flow and keep as many people in jobs as possible," Basheer said. We understand there will be tough days ahead – but want to collaborate with governments and our workforces on ideas to minimise the impact and maximise the recovery."