Home building spurs construction expansion

The long-hoped-for recovery in Australia's residential construction sector may finally be underway, with low interest rates driving the second fastest rate of expansion in new home building since 2005.

Strong growth in house building has helped drive the broader construction sector to its third consecutive month of expansion in December, after several years of decline.

According to Australian Industry Group (Ai) figures, there were also solid gains from the commercial construction and apartment building sub-sectors during the month.

Growth across the entire sector was a little slower than in the previous two months but Ai Group public policy director Dr Peter Burn said the figures were good news after a long period of weakness.

He said low interest rates were finally having a positive impact on residential and commercial construction.

"Low interest rates are clearly having their long-awaited

impact," he said.

Dr Burn said the figures suggested 2014 would be a better year for the construction industry.

"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.

The Ai Group's Performance of Construction Index fell 4.4 points to 50.8 in December, putting it in mildly positive territory, while the house building sub-sector rose 1.5 points to 63.5.

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Home building spurs construction expansion