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{{propApi.successMessage}} {{region}} Change locationHousing supply set to fall as thousands of new home contracts face cancellation
Housing supply set to fall as thousands of new home contracts face cancellation
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The Housing Industry Association (HIA) has called on Treasury to publicly assess the impact of the Government's new Self-Managed Superannuation Fund (SMSF) borrowing restrictions on housing supply, following the passage of the legislation through Parliament.
"The Government has made increasing housing supply its central housing policy objective.
"The question now is whether this SMSF legislation advances that objective or makes it more difficult to achieve. The legislation was passed without a cost/benefit analysis or any publicly available data on how significant the reduction in new home supply would be, as a result of this change.
HIA has today released the results of a survey of Australia's largest detached home builders, representing more than 40 per cent of national detached housing construction.
The survey found:
- builders currently have 3,613 signed contracts with purchasers using SMSF Limited Recourse Borrowing Arrangements that have not yet commenced construction,
- builders estimate 2,415 of those contracts, or 66.9 per cent, are likely to be cancelled once the legislation comes into effect,
- more than 70 per cent reported investor enquiries have already declined since the Federal Budget,
- almost 90 per cent expect detached housing commencements to decline during 2026 and 2027.
Mr Reardon said the survey provided the first direct evidence from builders of how the legislation is expected to affect housing supply.
"These are not hypothetical future investments.
"They are signed contracts to build homes that builders had expected to construct in the next year.
Mr Reardon said the findings reinforce an important distinction that is often overlooked in housing policy.
"SMSFs do not live in homes. They do not create demand for housing. They do provide capital that finances the construction of new housing.
"Restricting one source of investment does not reduce the number of Australians needing somewhere to live.
HIA estimates the combined impact of contract cancellations and weaker future sales is likely to reduce detached housing commencements by between 3.5 and 5 per cent, while reducing GST and stamp duty revenue to state governments by more than $450 million.
Mr Reardon said these estimates relate only to detached housing.
"The survey does not include financing of apartment construction, where investor participation is typically higher and pre-sales are often required before projects can obtain construction finance.
"The total impact on housing supply may therefore be greater than these estimates suggest.
“Treasury had appropriately modelled the housing supply impacts of the changes to negative gearing and capital gains tax announced in the Federal Budget.
"It is now appropriate that the same analytical framework be applied to the SMSF borrowing restrictions.
"Treasury should publish a housing supply impact assessment and cost-benefit analysis consistent with the analysis undertaken for the changes to negative gearing and capital gains tax.
"That assessment should quantify the expected impacts on detached housing, apartment construction, housing affordability and government revenue.
“The issue extends well beyond superannuation policy. This is ultimately about how housing policy is evaluated.”
"If increasing housing supply remains the Government's objective, then every major housing policy should be assessed against one simple question.
"Will it increase or reduce the future supply of homes?
"The next step is to transparently measure its outcomes and release that evidence prior to the next election."
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