The national construction industry reported an ongoing contraction in activity levels in February, albeit at a slower pace, the Australian Industry Group (Ai Group)/Housing Industry Association’s latest Index has revealed.
The Index rose 4.4 points in February to 44.6 per cent, remaining below the critical 50 point mark which indicates an expansion in activity.
House building activity fell for a ninth consecutive month and at a steeper rate, with the sub-index falling by 3.1 points to 34.2 while the rate of decline in apartment building activity moderated markedly with the sub-index rising by 22.7 points to 46.1.
"The slump in activity in the housing sub-sector in February marked the ninth consecutive month of decline. The fall in housing new orders is particularly disappointing and suggests the slump may still have some way to run,” Ai Group director public policy Peter Burn said.
Housing Industry Association (HIA) senior economist Andrew Harvey said the continuing fall in new orders for both houses and apartments aligns with other data pointing to considerable weakness in the residential building sector.
"It’s increasingly clear that the 2010 interest rate hikes have battered the housing industry. What we need after so many consecutive months of contraction in residential building activity is serious reform to the supply side of the housing market.
“This reform necessarily includes the removal of stamp duties on new homes and much faster land release processes, without which the pressure on families from higher house prices and rents is simply going to worsen," Mr Harvey said.