Housing under a cloud

He said this downturn put the industry further at risk of losing tradesmen to mainland employment opportunities.

He said any perceived increase in residential construction could not be seen on the ground.

The prediction comes despite the latest Commsec's State of the States report, released last week, which showed that although Tasmania trails other states in non-residential construction, dwelling starts are up almost 16 per cent on decade averages.

"There is no doubt that a decade on from 2000, we are building significantly more homes, but that was in a particularly difficult period where the renovation market was also half of what it is today," Mr Clues said.

"We've had seven good years since 2003 where we have consistently built 3000 (houses) per annum.

"But this year there is a marked softening in the industry and we predict that we will probably build 5 per cent fewer homes and probably wipe $50 million off the home renovation market compared to last year."

Mr Clues predicted a 5 per cent decline in the new home market this year, which would cost the $2 billion industry about $60 million.

He said that in January and February, there had been a 35 per cent decline in building approvals and a 14 per cent decline in finance - the two key drivers of housing construction.

Mr Clues reiterated his position that state planning laws worked against construction, which would be further impacted by proposed changes to federal government planning codes, which he estimated would add thousands of dollars to construction costs of a new home.

The state's building industry employs 20,000 people and Mr Clues said the downturn put Tasmania's skills base at risk once residential construction lifted again.

"I've got no doubt that young tradies are contemplating reconstruction work in Queensland or heading over to Western Australia to make their fortune in the mines," he said.

"So when things gear up again here, work will stall - not because the jobs aren't there but because the labour isn't."