Despite the continued rise in national housing demand, new construction in the March quarter has slid down to its lowest level since 2001.

But the Australia's largest residential building group, the Housing Industry Association (HIA), says this may be a bottom mark, and has forecast a 15% boost to starts by the December quarter.

The March quarter produced a 4.2% drop to 21,757 detached houses, according to figures from the Australian Bureau of Statistics. Multi-unit starts fell 3.4% to 9,192.

This was the result largely due to higher interest rates, credit constraints and a weak property market, all issues that carried over from late 2008, said Ben Phillips, a senior economist with HIA.

"The environment has changed in 2009 with record low interest rates, a boosted first homebuyers grant, and the federal government's social housing investment expected to push starts higher over the remainder of year," he said.

The biggest drops in the March quarter were in New South Wales at 7%, Tasmania at 16%, and the Northern Territory at 46%. Housing starts increased occurred in most notably in Western Australia, up by 6%.