BIS Shrapnel's latest report, commissioned by Village Building Company for a confidential sum, says land prices could rise to the levels of 2006 when the median rose to about $250,000 if Queanbeyan City Council's plans to develop Tralee are halted.

The building company has cleared another planning hurdle. The director of NSW Planning gave the council the green light yesterday to go ahead with public consultation for the development.

However, Canberra Airport opposes the project and a final decision on whether it actually goes ahead rests with NSW Planning.

The development is necessary if land prices are to stay down, according to BIS Shrapnel economist Jason Anderson.

It would increase the supply of affordable housing in the region and provide competition for land releases in the ACT. He said, ''Competing developments will keep us from moving back to the prices of 2006 when there was insufficient competition in land development.

''We've found that as long as there are three or four developments in the Canberra and Queanbeyan region, there's enough competition and land supply to keep prices down.''

Competition between developments had dropped median prices to about $210,000, but should supply of affordable land tighten, prices would shoot back up, Mr Anderson said.

The Molonglo development was unlikely to be affordable because of its premium location.

This year in the ACT, about 2000 houses are being constructed, far more than the mean of previous years; between 1200 and 1300.

''The rate of dwelling construction is at its highest level in more than a decade.

''You can get a pretty good house and land package for less than $400,000 in Canberra.

''I think it is not at the present time unattainably expensive,'' he said. However, Mr Anderson warned affordability had to align with population growth long term.

He believed residents would be willing to live in the development despite airport noise.

Housing Industry Association (ACT) executive director Stuart Collins agreed the Tralee development would alleviate problems with the supply and demand of affordable land.

''It's only a matter of time before the ACT starts to run out of [areas that can be developed] and that's why developments like Tralee are going to be vital in terms of our growing population.

''There are still areas like Bonner and Casey [that are comparatively affordable], but my feeling is that while Molonglo is desperately needed, Tralee could open up a whole new area.''