The May Federal Budget was designed to pull investors away from established properties and encourage them to buy newly built homes. Changes to negative gearing and capital gains tax were intended to reduce competition for existing properties while directing more investment towards additional housing supply.

However, another change followed the Budget. New borrowing arrangements for residential property through self-managed superannuation funds (SMSFs) were restricted, including for newly built apartments. This potentially removes a source of buyers for new apartment developments at the same time the Government is trying to encourage investment in new housing.

The latest ABS lending data provides an early indication of whether investors are changing their behaviour. We have compared investor loans for newly built housing, including construction, with loans for established properties. The June quarter only partly captures the period following the Budget and higher interest rates are also affecting investor demand. 

Nationally, the proportion of investor loans directed towards new housing increased from 17.9 per cent in June 2025 to 21.2 per cent in June 2026. Most of that increase occurred in the latest quarter, with the share rising from 18.0 per cent in March. This is a substantial increase, and also historically high.

While this sounds encouraging, the actual numbers tell a less positive story. Investor loans for new housing increased by 441 in the June quarter, from 10,482 to 10,923. Over the year, the increase was larger at 1,955 loans. At the same time, loans for established properties fell by 7,080 in the latest quarter, from 47,727 to 40,647.

For every additional investor loan for a new home, there were approximately 16 fewer loans for established properties. Overall investor loan commitments fell 8.6 per cent during the quarter. The increasing share of new housing is therefore being driven primarily by investors withdrawing from established properties, rather than a substantial increase in investment in new homes.

The state-by-state figures show considerable variation. Over the year, new housing investor loans increased in every state, led by Queensland, Victoria and NSW. However, in the latest quarter Queensland recorded 252 additional loans and Western Australia 223, while Victoria fell by 21 and South Australia by 15. NSW increased by just 30.

While there is some evidence of investors shifting towards new housing, it is unlikely to deliver the increase in construction Australia needs. The biggest barriers to new development remain high construction costs, expensive finance, skilled labour shortages and projects that simply don't stack up financially. Changing investor tax incentives does little to address these problems.

Recent building activity data initially provided some encouragement. National dwelling completions increased 5.8 per cent in the June quarter to 47,168 homes, while commencements also improved. However, the more recent approvals figures raise concerns that the budget has slowed development considerably.

Total dwelling approvals fell 6.1 per cent in August, including a 21.2 per cent decline in approvals for private sector dwellings other than houses, which includes apartments and townhouses. Detached house approvals actually increased by 3.7 per cent. Monthly approvals can be volatile and remain higher overall than a year ago, but the recent weakness in apartments is concerning.

The SMSF restrictions add another complication. Investor presales help developers secure finance for apartment projects, and restricting a source of potential buyers makes an already difficult environment harder. While it is too early to measure the impact of these changes on approvals, they potentially work against the Government's objective of encouraging more new housing.

The Budget may be changing where investors buy, but the decline in established housing investment is far greater than the increase in new housing lending. More importantly, the latest approvals figures suggest the construction pipeline remains under pressure, particularly for apartments.

Redirecting investors towards new homes is not the same as getting more homes built. Without addressing the economics of new construction, we are now even further from delivering the housing required to achieve true affordability.