While apartment oversupply concerns are something most people would be aware of by now, one construction lobby group believes there needs to be a level approach to how the issue is discussed.

The Housing Industry Association (HIA) said those raising oversupply concerns need to realise the importance of the residential construction industry to national economy and has warned of the danger that could come if there was a slowdown in the sector.

“Regardless of particular views around Australia’s different apartment markets, the last thing the Australian economy needs is an abrupt decline in new home construction activity. That outcome would severely dent economic and employment growth,” HIA chief economist Harley Dale said.

“Current discussion around new apartment markets in Australia and the potential for oversupply needs to remain balanced and grounded in order to maintain confidence in the new home building sector,” Dr Dale said.

But while the HIA believes the good associated with the apartment construction boom outweighs the bad, others have raised concerns about the viability of continued construction in the sector.

Those problems could soon be even more pronounced as the impact of stricter lending polices begins to materialise in the off-the-plan sector.

While lending restrictions have been commonplace for Australian investors recently, a number of lenders have recently ramped up their restrictions on foreign borrowers, with many completely stopping the practice.

Ian Hosking Richards, chief executive officer of Rocket Property Group, said those moves have already resulted in additional properties, including new units, hitting the market.

“Westpac screwed up and lent a lot of money to people that probably don’t even exist with forged documents there’s a possibility that a lot of off the plan purchases will fall over and come back on to the market,” Hosking Richards told Your Investment Property.

“We’ve already noticed it. We’re getting access to stock that’s fallen over because it was sold to a foreign investor previously,” he said.

There has also been concerns raised after the Victorian, New South Wales and Queensland governments raised property taxes for foreign buyers.

The Queensland government was the latest to do so, with foreign buyers facing an additional 3% stamp duty on residential purchases.

That move has been heavily criticised by the Real Estate Institute of Queensland (REIQ), who claims foreign buyers have accounted for nearly a fifth of the record number of new apartments built in the city recently.

“This is potentially disastrous news for our apartment market where some estimates have foreign buyers at around 15% to 20% across Brisbane in the new apartment market,” REIQ chief executive officer Antonia Mercorella said

“The Gold Coast apartment market also relies on foreign investment levels and this could be a significantly negative impact on that market,” Mercorella said.

“[The] additional surcharge on those buyers will significantly impact that market, at a time when we can’t afford to lose buyers,”

According to the HIA, residential construction, which has been at record levels recently, is set to remain elevated over the near future.

The HIA expects 1% rise in total new dwelling commencements in 2016/17, followed by a decline of 13% in 2016/17 which would take commencements to a still historically high level of nearly 189,000. The cycle is forecast to bottom in 2018/19 at around 163,600 commencements.