Building activity continues to improve and optimism about the future remains strong, despite the recent interest rate rise and pre-election uncertainty, according to the latest Master Builders Australia National Survey of Building and Construction.

The September quarter survey reinforces Master Builders Australia's recent call for sound national economic policy to be front of mind for all political parties to assist in delivering the estimated $1.7 trillion of investment required to build Australia's economic and social infrastructure over the next decade.

Master Builders Australia's chief economist, Peter Jones, says the latest survey "reveals builders becoming more positive about the outlook for residential activity with conditions in the non-residential sector expected to remain strong".

"Builders now expect residential activity to improve over the next six months, despite lingering concerns about housing affordability and other constraints on business activity."

He adds, "Despite this positive sentiment, momentum gathering force in the residential sector would be set back if interest rates, currently on hold, were to move higher."

"There is a critical need to boost supply, not hold it back, given that Australia is currently under-building by around 20% or 30,000 dwellings per annum."

In other key findings of the September quarter survey:

* Builders' own business activity rose again in the latest quarter.
* Builders expect business activity to improve further over the next six months.
* Business profits, already strong, are expected to improve further over the next six months.
* Builders have a healthy backlog of work on their books.
* The survey reports a positive outlook on the expected level of activity in the industry.
* Industrial relations as a constraint on activity stayed low in the quarter. Over two-thirds of builders now report industrial relations as a constraint to be either slight or non-existent.
* Pressures related to finding skilled labour appear to be building again, with acute skill shortages in some states and difficulties in attracting certain categories of labour.
* Builders expect interest rates to rise moderately over the next 12 months.