Australia's house building index nears expansion territory

Although the overall construction industry did not perform as well in August is it did in July, the house building sector showed improvement for the second consecutive month, which brought its index reading closer to expansion.

Last month, the house building sector's reading came in at 49, just shy of the 50-point line that denotes expansion from contraction. This was likely driven by more robust confidence among potential home buyers, experts said.

"The house building sector remains close to the point of stabilization with lower interest rates starting to provide some support to levels of activity and new orders within the sector," said AI Group director of public policy Peter Burn.

The reading for the construction industry as a whole fell slightly from 44.1 in July to 43.7 last month. The commercial building sector also saw its contraction slow, with its reading rising from 34.6 to 39.1 on the month.

Still, experts say there's a long road ahead to get back to industry-wide stability.

"Clearly we need to see much stronger conditions to offset the slack resulting from the winding down in mining related projects," Mr Burn concluded.