Residential construction in South Australia could fall by more than 10 per cent in the next financial year, a leading economic forecaster is predicting.
BIS Shrapnel's Managing director Robert Mellor predicts fewer houses will be built in SA but thinks the outlook for the commercial sector is more positive.
"We're predicting some pretty strong growth in non-residential building commencements in South Australia this current financial year," he said.
"It will be up about 22 per cent in terms of the value of commencements and then about another 16 per cent the following year."
He said the construction of hotels in Adelaide and work in the health and education sectors were helping to boost confidence.
But he said the state's population growth, which was behind most of the country, meant less demand for dwelling starts.
"On the residential front, it's not particularly positive and I suppose, as far as the residential property market is concerned, the market's relatively flat," he said.
"There's been very modest increases in the last 12 or 18 months."
He said last financial year about 10,500 homes were built and he tipped that figure could drop to about 8,500.
Mr Mellor said on the bright side, the market was stable unlike the "boom and bust" trends in Western Australia.
SA's unemployment rateof 6.8 per cent continues to be the worst in the country.