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Housing finance and construction
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Housing Finance measures finance provided to household borrowers for housing purposes. It does not measure all finance used to produce housing.
In the 2025/26 financial year, there were 68,930 borrower-accepted construction loan commitments to Australian households (owner-occupiers and investors). Over the same period, 119,410 private sector detached houses were approved for construction. Household construction lending was therefore equivalent to only 57.7 per cent of detached house approvals.
This apparent gap reflects how finance is classified. Within the ABS Lending Indicators series, classification depends substantially on who is borrowing, not simply on what is being built.
There are three key points to know when interpreting ABS Housing Finance data:
First, Household Housing Finance does not measure all finance supporting new housing construction. A substantial component of dwelling construction finance is recorded within Business Finance rather than Household Housing Finance.
Second, Business Finance is an important source of finance for new housing construction. In 2025/26, businesses borrowed $23.3 billion for dwelling construction, compared to $25.4 billion of owner-occupier construction lending and $22.0 billion of household investor construction lending. The availability and cost of business finance therefore matter for housing supply.
Third, the published data do not separately identify SMSF borrowing for new housing. SMSFs are classified within Business Finance rather than Household Housing Finance. The underlying regulatory reporting contains considerably more information than is publicly available, including information that could allow the Government to determine the number and value of SMSF Limited Recourse Borrowing Arrangements used to finance new housing.
What Housing Finance measures
The ABS Housing Finance data are sourced from APRA's Economic and Financial Statistics collection (ARF 743). The Housing Finance series measures borrower-accepted commitments where the counterparty is a household and the finance is for a housing purpose.
This includes finance for residential land, construction of new dwellings, purchase of new and existing dwellings, alterations and additions, and refinancing.
The series measures borrower-accepted commitments, rather than applications or subsequent drawdowns. Housing Finance commitments, building approvals and dwelling commencements therefore measure different events at different stages of the development process and should not be expected to move one-for-one.
Timing is only part of the explanation for the apparent gap between household construction lending and detached housing activity.
The borrower determines where the finance is recorded
Consider three scenarios for financing new dwellings.
- A household purchasing land and obtaining a construction loan to build a home is classified within Household Housing Finance.
- A builder borrowing to construct dwellings for subsequent sale is classified within Business Finance. The physical output is still housing, but the borrower is a business.
- A self-managed superannuation fund borrowing to acquire land and construct a dwelling is also classified within Business Finance. An SMSF is not treated as a household for the purposes of these finance statistics.
The same physical output, a new dwelling, can therefore be associated with different finance series depending on who is borrowing.
ABS Household Housing Finance data captures only one source of the finance supporting new housing construction.
Business Finance accounts for a substantial part of the gap
In 2025/26, businesses borrowed $23.3 billion for the purpose of the construction of dwellings. By comparison, owner-occupier dwelling construction lending was $25.4 billion and household investor construction lending was $22.0 billion.
Business lending for dwelling construction is therefore substantial relative to household construction finance.
The published Business Finance series reports the value of these commitments, rather than the number of loans. This prevents a direct comparison between the number of household and business construction loans.
An illustrative calculation provides an indication of scale. Applying the average owner-occupier construction loan value (i.e. $668,380 in the June quarter 2026) to business dwelling construction lending produces an equivalent of 34,019 household-sized construction loans in 2025/26.
This is not an estimate of the number of business loans or dwellings financed. Business construction facilities differ from household construction loans, and a single development facility may finance multiple dwellings. The calculation instead demonstrates the scale of construction finance sitting outside Household Housing Finance.
When this business lending is considered alongside household construction lending, much of the apparent gap between household construction loans and detached housing activity becomes understandable.
Other activity will remain outside both series, including outright financing, financing arrangements for non-residents and lending by institutions below APRA's reporting thresholds. The ABS estimates that the applicable reporting thresholds capture approximately 95 per cent of lending activity for each purpose.
Business Finance and housing supply
Businesses borrow to acquire land, develop projects and construct dwellings. The availability and cost of this finance therefore affect the capacity of businesses to bring new housing to market.
Purchaser finance can occur at a different stage. An owner-occupier or investor may enter into an off-the-plan contract and pay a deposit before construction, but the mortgage used to complete the purchase may not arise until settlement.
The finance enabling construction and the finance ultimately used to purchase the dwelling can therefore be provided to different borrowers, recorded in different statistical series and occur at different stages of the development process.
Measures that restrict the availability of business finance, or the purchasers and pre-sales supporting that finance, can consequently affect the capacity to construct new homes. These effects will not necessarily be evident from movements in Household Housing Finance.
Why SMSF lending is difficult to identify
An SMSF using a Limited Recourse Borrowing Arrangement to finance the construction of a dwelling is classified within Business Finance rather than Household Housing Finance. However, published Business Finance data do not separately identify SMSFs from other business borrowers. To add to this complexity: while Household Housing Finance provides information on both the value and number of relevant commitments, published Business Finance data only provide the value of loans.
There is therefore no published ABS Housing Finance series from which the number of SMSF loans financing new housing can be directly observed.
This does not mean the underlying lending is unreported. SMSF lending by institutions subject to APRA's reporting requirements is captured within the Business Finance reporting framework. The public data aggregate SMSFs with other business borrowers.
The distinction between the information collected by regulators and the information subsequently published is therefore important. The APRA reporting framework should be examined to establish whether the underlying regulatory data can identify the number and value of SMSF LRBAs used to finance new dwellings.
If those data permit this identification, government could provide a direct measure of SMSF lending for new housing rather than relying on estimates derived from published aggregate statistics.
Conclusion
Australia's Housing Finance statistics provide an important measure of household borrowing, but they should not be interpreted as a measure of all finance supporting housing construction.
Business Finance is also a substantial source of funding for new housing, and changes in its availability can have implications for housing supply.
SMSF borrowing illustrates both issues. It finances residential construction but is classified within Business Finance and cannot be separately identified in the published statistics. Establishing what the underlying regulatory data can reveal about this lending would provide a stronger evidence base for assessing the impact of policies affecting SMSF finance and new housing supply.
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