The latest data from the Australian Bureau of Statistics showed an unexpected drop of 2.1% to $25,422m in the total value of construction done in the September quarter. The sharpest fall came from engineering construction work, which sustained a 5.1% drop to $10.4bn. Construction for residential building was flat at $9,250.2m for the same quarter. In contrast, the total work done for renovations and alterations increased by 2% to $1.5bn. HIA's chief economist Harley Dale said the residential construction failed to grow at all in the September quarter, as low affordability stifled any hope of sustained recovery for home building. "Housing affordability is very low and still falling. This will lead to subdued levels of new home building over the next six to 12 months," he said. Another industry body, Master Builders Australia, shares similarly gloomy outlook for the sector. Its chief economist, Peter Jones, warned that the construction growth phase is in danger of stalling as higher interest rates stymie recovery in the residential building. "Overall, the construction sector is likely to detract from economic growth in the September quarter and the Reserve Bank of Australia needs to hold off further rate rises until the damage caused by the lagged effects of previous rate rises can be assessed," he said.

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