Construction has slipped to its worst level since the post Sydney Olympics slump, raising concerns that residential building could struggle to take over from mining to drive the economy.

The amount of construction work done in Australia fell 2.2 per cent in the September quarter, and was down 5.1 per cent for the year, official figures show. It was the worst yearly fall since the 20 per cent slump after the Sydney Olympics building boom, UBS economists said. Residential…