A report by the Australian Industry Group/Housing Industry Association revealed that construction activity remained flat throughout Australia during November, reporting a fall in demand for apartment building and engineering construction, which restricted growth.

The survey claimed that new orders declined for a second month in a row in December, hinting at subdued industry conditions over the coming months.

The seasonally adjusted Performance of Construction Index rose 1.7 points to 49.3 points in December from November, just below the 50 that separates expansion from contraction. However, the net performance of the industry registered below the key 50-point mark that indicates expansion.

It is cited that weakness in apartment building has overwhelmed improved activity in the construction of detached homes.

Ai Group spokesman Peter Burn said, "While the growth in house building is encouraging and provides critical support to overall levels of activity, the impact of higher interest rates and the removal of the first home buyers grant boost will test the durability of the housing recovery over the coming months".

The December result points that there is no surety of a recovery in home building industry even in 2010, augurs HIA senior economist Ben Phillips. In addition, he said that rising interest rates in
2010 can have a significant effect on the housing and building industry.