In the December 2013 quarter, home building recorded the second highest rate of expansion since the survey began in September 2005.
Australian Industry Group director, public policy Peter Burn said both the apartment and housing sector were flourishing.
“The recent spurt of growth in residential construction continued in December with ongoing strength in both apartment and house building activity,” he said.
Mr Burn explained low interest rates were spurring demand for construction services.
“Low interest rates are clearly having their long-awaited impact and the continued growth of new orders means that builders – and the manufacturing and service industries that are linked to the commercial and residential construction sectors – can look forward to 2014 with a greater degree of confidence than prevailed only a few months ago,” he said.
Housing Industry Association chief economist Harley Dale said that increased construction activity was a positive indicator for 2014.
“The key is that the index remained in expansionary territory," he said.
“Four months of such expansion, following as it does years of contraction, is an important tick in the box for Australia’s growth prospects in 2014 given the position of the Australian PCI as a key leading indicator of Australia’s construction activity.”