Government data issued yesterday showed growth in building approvals unexpectedly fell for a second straight month in June and now stood nearly 8 per cent lower than a year earlier.

Commonwealth Bank estimates say annual approvals are around 160,000 units, well below the 185,000 needed to meet demand from population growth, 457 visa workers, students and working visa groups.

CBA senior economist Michael Workman said the insufficient level of residential construction would intensify the shortfall in rental accommodation that was driving rents up strongly.

He said rents were likely to rise by 10 per cent over this year, adding about 0.5 per cent to already heated inflation pressures.

A report last week showed rents grew by double digits in most of the country's major cities in the past 12 months, including 25 per cent jump in Perth.

The Federal Government launched its National Rental Affordability Scheme last week, which is aimed at increasing the supply of affordable rental dwellings by 50,000, and possibly 100,000 by 2012.

But analysts expect it could be at least a year before struggling low-income families gain any benefit.

Building approvals fell for a second straight month in June, declining by a seasonally adjusted 0.7 per cent to 12,237 units, according to the Australian Bureau of Statistics.

Economists had expected a 1 per cent rise in June after a revised 7.2 per cent decline in May.

The weaker-than-expected result was largely due to a further 1.4 per cent decline in ''other dwellings'' such as flats and apartments which have now slumped 22 per cent in the past year. AAP