New South Wales trails the states on new-build lending as commencements rise 7% nationally

New builds have made up a smaller share of home lending in New South Wales than in any other mainland state in every quarter since 2020, ABS figures analysed by AreaSearch show. At June 2026 the share was 13.4%, the lowest of the eight states and territories, against 24.8% in South Australia, as the housing crisis intensifies in Australia’s most populous state, where profitability is out of reach for many residential developers due to sky-high materials, labour and site costs.

NSW has also seen the slowest growth in housing finance commitments, up 1.3% over the year to June, and fewer homes approved than either Victoria or Queensland, where developable land on the urban fringes is in higher supply.

A national lift in dwelling commencements of 7% over the June quarter came largely from detached houses, with apartment and townhouse starts flat, and approvals since point the same way: over the three months to August, house approvals were up 14.7% on a year earlier, against 4.1% for apartments and townhouses nationally and 1% in NSW. That leaves NSW in a particularly tough position as new supply depends so much on apartment projects. With negative gearing moving to new builds only, a growing number of investors who had previously opted for the familiarity and simplicity of residential are now setting their sights on commercial property, where opportunities for differentiation and value-add are more numerous, and structural trends lock in demand for sectors such as medical, which can often be accessed at similar price points to residential.

While pricing pressure is easing for home buyers, the necessary lift in new supply is likely to be drawn out, in NSW especially.

Sources: ABS, AreaSearch.