Could the engine stall

Could the engine stall?With property the nation’s big economic engine as mining investment fades, should we be worried that the construction cycle has passed its peak? Glenn Byres says we need to understand local market dynamics.Byres, the Property Council’s chief of Policy and Housing at the Property Council, says there can be no doubt that the data and indicators are pointing to Australia having moved past the peak in the construction cycle, particularly when it comes to dwelling approvals. “We’ve got a combination of tighter lending conditions from banks and regulators, lower consumer price growth and foreign investment taxes starting to hit home – all of these things are having an impact on the national story,” Byres says.But the market-by-market narrative paints a very different picture, Byres says.”The consistent feedback we’re getting from members is that local economic conditions, supply levels and lending practices are producing variable results across the country.”Sydney and the vast bulk of Melbourne continue to perform very well, but it’s certainly tougher in pockets of the Brisbane market, and Perth is in an economically-challenging place.”In some markets, such as Sydney, talk of an oversupply is simply laughable.”We’ve undersupplied the market for so long in Sydney that we are still playing catch up. It doesn’t matter whether you are in apartments or greenfield, there is pent up demand.”The big challenge, Byres says, is housing affordability.”We know over the medium to long term that 80 per cent of our nation’s population growth will flow into our four biggest cities – so while there may be ups and downs in these markets in the short term, demand over the long term will only increase.”Byres says the negative gearing debate during the federal election was “about a tax measure, not about affordability”, and that it’s time for a serious national conversation.The Property Council recently welcomed the Labor Party’s commitment to make housing affordability a primary policy issue for the Opposition over the coming term, and Byres says he agrees with Shadow Treasurer Chris Bowen that Australia cannot afford for the next generation to be priced out of the market.”High rates of home ownership across all parts of Australian life are critical to social cohesion and economic security.”How we structure a system to ensure future generations can afford a home is our big challenge – and that’s why we need to keep a close eye on the fundamentals that shape housing approvals.”