Home renovation activity is increasing in Canberra driven as a cost-effective option to high and rising house prices, high transaction costs for buyers and sellers, a growing do-it-yourself culture and those flipping properties for profit.

Latest ABS data reports that Canberra private sector residential alterations and additions to the value of $21.9 million were approved over the March quarter, which was an increase of 11.0 per cent compared to the March quarter last year.

Over the past year, Canberra has now approved $98.8 million in private sector residential alterations and additions.

Tuggeranong was the most popular Canberra region for private sector residential alterations and additions over the March quarter with building approvals to the value of $5.2 million followed by Belconnen $5.0 million, North Canberra $4.3 million, South Canberra $2.7 million and Woden Valley $1.8 million.

The most popular Canberra suburb for private sector residential alterations and additions over the March quarter was Red Hill, with building approvals to the value of $1.1 million, followed by Chisholm with $1.0 million, Watson $0.98 million, Aranda $0.81 million and Cook $0.79 million.

Increased building activity is a clear positive for the Canberra economy and will add to the recent revival in the local jobs market. The ABS reported a Canberra unemployment rate of 3.4 per cent over April, which was the lowest for the year so far and well down from the 3.9 per cent recorded over April last year.

Canberra jobs have also increased over the past year, rising by 3442 to 216,800 and up by 1.6 per cent.

Dr Andrew Wilson is Domain Group chief economist. Twitter: @DocAndrewWilson Join on LinkedIn and Facebook at MyHousingMarket.