As 2015 draws to a close it is timely to reflect on the remarkable year that has passed. Economic circumstances are not greatly different to what they were twelve months ago – growth is still below trend, unemployment whilst relatively stable is lower than it should be for growth and business and consumer confidence are mixed despite record low interest rates. Investor activity in housing which has been strong but is now slowing, as macro prudential measures take affect, has resulted in a supply response from the building sector which reports a better outlook than it has for some years and is taking up some of the gap in economic activity from a declining mining sector. Indeed, dwelling investment has been the second largest contributor to growth in the Australian economy. Australia’s property industry is emerging as the main driver of economic growth and increased employment. Whilst investor activity is abating the lending figures show that owner occupiers are now having a greater presence in the market. First home buyers have, however, slipped to just 15.1 per cent of total owner-occupied housing finance commitments – the lowest since June 2004. Spurred on by low and stable interest rates we have seen weighted median prices increase for the eight capital cities to nearly $700k for houses and $550k for other dwellings with Sydney reaching a median house price of over $1m. A legacy of the past increase in investor activity has been increases in vacancy rates and with it only moderate increases in rents and, in some cases, declines. A feature of the past year has been the diversity of the Australian housing market with the median price in Sydney increasing by 22.6 per cent in the twelve months to September whilst Perth decreased by 5.0 per cent. The Sydney median is three times that for Hobart. On the policy front it is particularly pleasing that the Government has embraced taxation reform. There is no doubt that taxation policy and its reform will be the number one issue going into the 2016 Election and public debate will intensify following the release of the Green Paper in February next year. Whilst negative gearing will be scrutinized in the Green Paper the economic arguments for its retention will prevail. REIA will continue lobbying for the maintenance of the present taxation arrangements regarding property as well as the abolition of stamp duties which are hindering economic growth.