Updated figures released by the Australian Bureau of Statistics show new home building activity is still in decline, however major renovations continue to grow.

The September quarter result for major renovations (alterations and additions) represents the fourth consecutive quarter of growth and took the worth of work done on major renovations to almost $1.9 billion, a new record high.

Residential building work done fell by 1.1 per cent to $11.4 billion in the September 2011 quarter.

New residential building work done fell by 1.5 per cent in the September 2011 quarter to be down by 5.2 per cent on the September 2010 quarter while the value of major renovations work done grew by 0.9 per cent to be up by 6.3 per cent on the commensurate quarter one year earlier.

Housing Industry Association economist Andrew Harvey said: "At the national level, new home building has been on a consistent downtrend, while renovations have not only held up well but continue to grow - the renovations side of the home building industry is definitely the shining light at the moment.”

"This trend of growing renovations is likely to continue not only because Australians love to renovate but also as households increasingly prefer to direct excessive property transaction costs towards improving their existing homes rather than trading up," he said.

Building and construction: the mining boom gulf

Master Builders Australia released a statement saying that figures showing building and construction work rising strongly in the September quarter shows a widening gulf between mining-related engineering construction and the building sector.

Peter Jones, Master Builders Australia's chief economist said, the figures confirm evidence from Master Builders' latest survey showing dramatic turnaround in builder sentiment as commercial and residential building-related stimulus spending programs come to an end.

"The tough business environment is not being helped by volatility in the world economy and investor caution."

"The release shows that building work yet to be done and in the pipeline fell in the September quarter, confirming Master Builders' information that builders are suffering a downturn in sales and enquiries."

"A negative growth trend is firmly established in both the residential and commercial or non-residential building sectors, with no indication that conditions will turn around without policy change."

"There was another strong increase in engineering construction work done as mega-mining projects ramp up, particularly in Western Australia during the September quarter and in Queensland the previous quarter."

"A sectoral divide has opened up in the building and construction industry, with booming engineering construction fed by the mining boom contrasting with a weak building sector caught in the slow lane of a post GFC economy struggling to transition to a private sector led recovery."

David Wheeldon

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