Another decline in dwelling approvals in June is further proof of a wavering residential building upturn, and notwithstanding a monthly increase, there has also been a significant fall in non-residential building approvals as the boost from the Government's economic stimulus fades, according to the peak body for the building and construction industry, Master Builders Australia.

Chief economist Peter Jones said "The good news is that a recovery in approvals of units and apartments may be gaining momentum as investor-driven activity finally begins to shake off lingering effects of the credit squeeze."

According to him, "The bad news is that total dwelling approvals are running at an annualised rate of around 160,000, forty per cent below what is required to make inroads into Australia's massive supply shortage."

"Government programs like the BER prevented a total collapse in commercial or non-residential building activity, but the spike in approvals has now reversed, shrinking to around $20 billion in annualised terms, a decline in the order of 40 per cent from levels achieved in 2008."

"Private sector commercial building activity remains weak, and Master Builders' recent national survey reveals that the industry is becoming increasingly concerned about prospects."

"A period of interest rate stability from the Reserve Bank is critical, not only to ensure a sustainable upswing in residential building, but in order to safeguard against any further ratchet down in non-residential building activity," Mr Jones said.