The housing construction industry is set for a challenging immediate future, according to the latest report released by the Housing Industry Association (HIA).

The latest National Outlook released by the HIA examines the environment fore businesses operating in both sectors of the residential construction industry.

“Cautious household attitudes continue to restrain expenditure on residential construction, although many prospective buyers are being impeded by tight credit conditions. This impediment is preventing some new home building and larger renovation jobs from proceeding,” said HIA Chief Economist, Dr Harley Dale.

The report forecasts a flat year for housing starts throughout the year across the country, while some pockets of growth will be seen in NSW and Western Australia.

“Renovations activity endured a disappointing year in 2012, falling to its lowest level since 2002, with weaker levels of home equity restricting finance for renovation jobs,” Dr Dale said.

HIA is forecasting modest growth of 1.9 per cent in 2013 and 2.3 per cent in 2014 which would take the value of total renovations investment to $29.7 billion, around $1.4 billion short of the 2011 peak.