ABS data has revealed construction of new dwellings fell 7.9% in May. Master Builders chief economist Peter Jones said a lack of demand and shaky consumer confidence suggest this trend will worsen.

"The latest figures are in line with Master Builders’ latest June quarter survey that shows builders concerned about a lack of private sector demand to compensate for reduced public demand as BER and other programs wind down. Master Builders’ latest survey reveals builders have become pessimistic as forward indicators turn sour and financial and other regulatory constraints continue to affect activity," he commented.

Jones called on the government to remove development barriers, claiming building approvals need to increase by 50% in order to meet supply shortages.

"Reputable commentators including the Productivity Commission, Housing Supply Council, Henry Tax Review and the Reserve Bank have all stated that unless there is urgent reform to address bottlenecks the strong supply response needed to meet Australia’s housing shortage will not eventuate," Jones said.