National construction activity has fallen for the second consecutive month in November 2006, according to the Australian Industry Group – Housing Industry Association Performance of Construction Index.
In November, the Australian PCI index fell 1.6 points to 47.6 and readings below 50 indicate construction activity is generally declining.
Ai Group’s associate director of economics and research Tony Pensabene said the strengthening activity in commercial and engineering construction is providing a floor under what could have been deeper consequences for the construction sector from the recent interest rate increases.
“Three rate rises this year, have combined to dent activity in the housing and apartment sectors, particularly in the mortgage heartland of the largest capital cities. Despite an underlying shortage of housing supply, consumers and industry will need a period of stability in order for confidence and demand to grow.” he added.
HIA’s executive director of housing and economics Simon Tennent said very low levels of housing affordability are preventing a recovery in resource-poor areas of Australia and are dampening activity in resource-rich areas of the country.
“That is hardly an environment where contemplation of a further rate rise is required,” Tennent said.
By Kathryn O’Meara
