The outlook in the building and construction sector is concerning as government stimulus spending winds down, says the peak body of the industry.

According to Master Builders Australia, residential building, after promising so much, runs the risk of turning down as Reserve Bank rate rises wreak collateral damage on slow-lane sectors of the economy supposedly to head off inflationary effects of a possible upsurge in mining.

The comments come as data from the Australian Bureau of Statistics released today show total construction work in the September quarter fell 2.1 per cent to $41.4 billion.

Master Builders Australia chief economist Peter Jones said "Master builders surveys are picking up a renewed sense of pessimism and residential builders are reporting an across the board slowing sales."

"Finance constraints continue to act as a handbrake on the building and construction industry due to the credit squeeze and rising costs," Mr Jones said.

"Engineering construction activity is trending lower although the pipeline of resources-related work yet to be done and government infrastructure spending should cushion the impending fall."

"For the building and construction industry, it is becoming increasingly uncertain as to whether an upswing in residential building can regain momentum and offset weak non-residential building, particularly as stimulus spending programs begin to wind down."

"Unless there is urgent reform to address bottlenecks in the residential building market, the strong supply response needed to meet housing demand will not eventuate, with dire consequences for affordability."

Master Builders said it supports the findings of the Henry Tax Review on housing affordability and will continue to push for the need to address inefficient developer charges, land release regulations and the approvals process as part of reforms to remove impediments affecting the supply of housing.