Australia wants U.S. builders to ease housing crunch

CANBERRA (Reuters) - Australia may relax visa laws to allow thousands of foreign builders, mostly from the United States, to work in the country to ease a chronic shortage of housing, the government said on Tuesday.

As Australia's second biggest state prepared to dump thousands of new home sites onto the market, likely sparking a fresh house building frenzy, Prime Minister Kevin Rudd said the government may help recruit up to 15,000 foreign workers.

"We know there's pressure in the construction industry for housing and obviously there is an availability of supply in various parts of the world, like the United States," Rudd told Australian television.

Australia's biggest cities are full, with people struggling to find a home to buy or rent, posing one of the first big challenges for Rudd's government, which won power in November.

After 17 years of economic growth, and with unemployment at 33-year lows, the housing shortage is pushing up prices and helping drive inflation to a 16-year high of 3.6 percent.

With annual growth near 4 percent, Australia's central bank

on Tuesday raised borrowing costs to a 14-year high of 7.25 percent, bringing more pain to people paying off mortgages.

At the same time, the government in Australia's second most populous state, Victoria, released 90,000 new home sites in one of its biggest land releases to help tackle the home affordability crisis.

Rudd has said housing affordability was "the worst it has been in living memory", with more than 1 million households suffering severe mortgage stress, spending more than a third of their income on housing.

Rudd's centre-left Labor government was elected on a pledge to help both ease the national housing shortage and rising inflation by slashing spending and delivering Budget surpluses of at least A$18 billion ($16.8 billion).

(Editing by Jeremy Laurence)

($1=A$1.07)