The already tight supply of residential dwellings is set to contract further as construction activity continues to decline.
The Australian Industry Group/Housing Industry Association (HIA) Performance of Construction Index (PCI) declined for the fourth consecutive month in June to 40.3 per cent, the groups revealed today.
An index reading of 50 points is needed to separate expansion from contraction.
Tony Pensabene, Australian Industry Group associate director of economics and research, said the results confirmed the intense pressures the construction sector was under from high interest rates and tighter liquidity.
These pressures are likely to ensure construction remains flat for some time, said Harley Dale, HIA's chief economist.
“The 2008/09 financial year will be a flat one at best for new residential construction and this situation will place further pressure on already tight rental markets, among other negative impacts,” Mr Dale said.
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