Property market could be heading south after construction boom

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Property Council's chief of policy and housing Glenn Byres insisted that talk of a housing bubble is "simply hot air," despite official data from the Australian Bureau of Statistics showing a 5.1 per cent fall in building commencements and 2.3 per cent drop in completions for the December quarter.

"While the number of commencements and completions over the past 12 months remain at record highs – reaching 220,887 throughout 2015 – there is now a real risk that housing starts could head south," Byres said. "We only risk a housing bubble if we are creating demand that won't be met."

He emphasised that there is currently a shortage of supply after the peak of the construction boom, yet the fundamentals supporting the housing market are sound.

"The economy is growing, jobs are growing, and our population is growing," he said. "This is the first time we've seen a balance between supply and demand in more than 10 years. We are only just now hitting the levels of supply we need."

Byres also added that the 14 per cent fall in commencements in New South Wales is a cause for concern.

"It is a reminder that NSW needs to get cracking and fix up its planning system, which is still the most dysfunctional in the nation," he said. "We need policy solutions in place that reduce the time, cost, and red tape on projects and make it easier to deliver a sustained period of strong supply and improve affordability over the long term."

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