Aussie housing construction expands again

Housing construction activity has expanded for two months in a row for the first time since 2010. Source: AAP

AUSTRALIAN housing construction activity has expanded for two months in a row for the first time since 2010, in a sign that low interest rates are slowly working.

The Australian Industry Group/Housing Industry Association's performance of construction index (PCI) rose by 0.8 points in November to 55.2.

The reading for October rose above the key 50 level, showing expansion for the first time in more than three years.

In November, new orders ran at the strongest pace in eight years while deliveries from suppliers also improved, taking the PCI reading to the strongest point since April 2010.

Ai Group public policy director Peter Burn says the rise in construction activity last month shows low interest rates are slowly working.

"The long-awaited re-balancing of the domestic economy may be getting underway on the back of low interest rates and a lift in business and household confidence," he said in a statement on Friday.

"However, given the extent of the slump in residential and commercial construction over more than three years, the expansions recorded in October and November are from a low base and we are still some months from a convincing recovery."

HIA chief economist Harley Dale said tight credit conditions were an "avoidable roadblock" to a construction-led recovery in the economy.

"To sustain that recovery and return new home building to strong levels requires closer attention to policy reform than is currently evident," he said.

House and apartment building moderated in November, from October's high levels, but remained in the expansionary territory, along with engineering and commercial construction.

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