The current slowdown in the building and construction sector is creating the best opportunity for investors to upgrade their rental properties cheaply, a new report showed.

Archicentre is forecasting renovation costs to drop 5-15% over the next six months as more tradespeople move from commercial to residential properties.

Angus Kell, state manager, ACT & NSW for Archicentre, said that residential building construction costs have not changed much in the last quarter but the cost of labour will come down as a result of increasing number of tradies competing for work.

"Coupled with the rapidly declining interest rates, we are seeing the best climate for residential construction for many years," he said.

Archicentre noted that for a new house and major renovations, materials account for 46% of the cost and labour 33%.

Angus warned investors to check a builder's credentials to ensure they are registered, have appropriate insurance, are able to show examples of their work and, most importantly, are able to complete the project on time.

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