Building activity saw a decrease during the December 2010 quarter, according to the latest figures from the ABS, with residential construction work falling by 1.1%.

On a year by year basis however, residential construction work was up by 7.9% on the 2009 calendar year thanks to strong figures for the March and June quarters.

When it comes to new residential construction, the amount of work taking place has now fallen for two consecutive quarters, dropping by 5.2% in September and 1.7% in December.

Renovation activity however looks to be on the up, with major alteration and addition works increasing by 2.5% for the December quarter and 6.3% for the year as a whole.

“Renovations continue to be popular as Australians increasingly look to improve their existing homes rather than face the mounting transaction costs, such as stamp duties, that they will incur if they trade-up to another property,” said Housing Industry of Australia (HIA) senior economist Andrew Harvey.

“Unfortunately Australia’s high property transactions costs do not help the problem of Australia’s undersupply of housing, nor the affordability problems faced by both prospective home owners and those in the market for rental property,” he added.