Building approvals have slumped by 3.5% to 12,168 homes and units in November 2005 and approvals are expected to remain soft throughout 2006.
Detached house approvals also fell by 4% while approvals for apartments eased by 2.4%.
For the December 2005 quarter, building approvals were down by a moderate 6.1% compared to 2004 levels. Detached house approvals were only 1.7% lower while multi-unit approvals were down by a more significant 14.9%.
The Housing Industry Association predicts 2006 will be a weaker year for residential construction due to the current profile of confirmed building approvals.
Harley Dale, HIA’s chief economist, said that the orderly pull-back in building activity which began in 2005 was expected to continue in 2006.
"Building approvals are close to bottoming, they haven’t tanked along the way, and there is still around $13 billion worth of new building work in the pipeline. So 2006 will be a softer year, but not a savage year," Mr Dale said.
"With stable interest rates and tight rental markets, demand for new housing will continue to build, so we would expect to see the market find a base by the end of the year," Mr Dale added.
In December 2005, dwelling approvals increased in the ACT (14.7%), New South Wales (6.2%), Tasmania (1.6%), and Western Australia (1.4%). Approvals fell in Victoria (7.6%), Queensland (6.5%), and South Australia (2.5%), while approvals were fixed in the Northern Territory.