The industry asked the government to model the housing impact of its SMSF borrowing ban. The government didn’t. So builders went and counted the contracts themselves. The numbers are now on the table.
Back in June, the question was theoretical. The Housing Industry Association wanted Treasury to model how banning self-managed super funds from borrowing to build homes would affect supply. The government passed the legislation without doing that work.
Now there are numbers. And they come straight from the people holding the contracts.
The HIA has surveyed Australia’s largest detached home builders, a group representing more than 40 per cent of national detached housing construction. What those builders reported is the first hard evidence of how the ban is likely to land.
What the survey actually found
The headline figure is the one worth sitting with. Builders in the survey are currently holding 3,613 signed contracts with purchasers using SMSF limited recourse borrowing arrangements, and none of those homes have started construction yet.
These are not leads. Not enquiries. Signed contracts to build homes.
Of those 3,613 contracts, builders expect 2,415 to be cancelled once the legislation takes effect. That is 66.9 per cent. Two out of every three homes on the books, gone.
The rest of the survey fills in the picture around that number. More than 70 per cent of builders reported that investor enquiries had already dropped off since the Federal Budget. Almost 90 per cent expect detached housing commencements to fall across 2026 and 2027.
Put simply, the pipeline was already thinning before the ban even started. The legislation just puts a date on the cancellations.
Why this matters more than the raw count
When we covered the HIA’s original call in June, the argument was about method. The government modelled the housing impact of its negative gearing and capital gains tax changes, but not the SMSF measure. This survey is the industry filling that gap itself, and it is worth reading as the first direct read from builders on what the change is likely to do to supply.
SMSFs do not live in homes. Take that capital away and you do not reduce demand for housing. You reduce the number of homes built to meet it.
The distinction the HIA keeps drawing is the important one. As Reardon put it, SMSFs do not live in homes. They do not add to the number of Australians needing somewhere to live. What they do is provide capital that finances construction. Take that capital away and you do not reduce demand for housing. You reduce the number of homes that get built to meet it.
That is the mechanism builders need to understand. A cancelled SMSF contract is not a family who no longer needs a home. It is a home that no longer gets built.
The number the government now has to reckon with
The HIA has put its own estimate on the total effect. It expects the combination of cancelled contracts and weaker future sales to cut detached housing commencements by between 3.5 and 5 per cent. It also estimates the hit to state government revenue, through lost GST and stamp duty, at more than $450 million.
And that is the conservative version. The survey only covers detached housing. It does not touch apartments, where investor participation runs higher and where pre-sales are often the thing that unlocks construction finance in the first place. Reardon’s point is that the total supply impact could be larger than these detached figures suggest, because apartment projects are more exposed to exactly this kind of marginal investor.
That marginal point is easy to skip past and shouldn’t be. Home building often turns on the last buyer who makes a project viable. Remove a small slice of investors and you do not lose a proportional slice of homes. You lose the projects that only ever stacked up with those buyers in them.
Where this sits in the bigger picture
The SMSF ban did not arrive on its own. It came bolted onto the broader property tax package that starts biting from 2027, passed as the price of getting that legislation through the Senate. The borrowing ban itself received Royal Assent on 26 June 2026 and commences on 10 August 2026. Existing arrangements are grandfathered. New SMSF residential borrowing stops from that date.
For builders, the timeline is the practical part. If a contract relies on an SMSF loan that has not settled before commencement, it is exposed. The 2,415 cancellations builders are forecasting are not spread over years. They cluster around the moment the ban switches on.
The HIA’s ask has not changed since June. It wants Treasury to publish a housing supply impact assessment and a cost-benefit analysis, the same treatment given to the negative gearing and CGT changes. The survey is the industry’s way of saying: here is our working, now show us yours.
The Good Builder Take
Whatever you think about SMSFs as an investment vehicle, the supply logic here is hard to argue with. A signed contract that gets cancelled is a home that was going to be built and now won’t be. Multiply that by 2,415 and you have a measurable dent in detached supply, in a country that has spent two years talking about a shortfall.
The frustration the industry keeps voicing is not really about super policy. It is about consistency. If a housing policy is big enough to change, it is big enough to model. The government applied that test to negative gearing. It skipped it here. Builders have now done the counting the government chose not to, and the number is specific enough that it will be difficult to wave away.
For builders with SMSF contracts sitting in the pipeline right now, the message is more immediate: know which of your jobs depend on a loan settling before 10 August, and plan for the ones that won’t. This is not a distant policy debate. For some of you, it is a live risk to work you have already signed.
Frequently asked questions
The HIA survey of Australia’s largest detached home builders found 3,613 signed contracts using SMSF limited recourse borrowing arrangements that had not yet started construction.
Builders estimate 2,415 contracts, or 66.9 per cent, are likely to be cancelled once the SMSF borrowing ban takes effect.
The ban commences on 10 August 2026, 45 days after the legislation received Royal Assent on 26 June 2026. Existing arrangements are grandfathered.
The HIA estimates the combined effect of cancellations and weaker future sales will cut detached housing commencements by between 3.5 and 5 per cent, with the total impact potentially larger once apartments are included.
No. The HIA’s argument is that SMSFs supply capital for construction rather than creating housing demand, so restricting them reduces the number of homes built without reducing the number of people needing homes.
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For the wider forces reshaping the Australian construction market, see our Australian Construction Industry Trends Guide.
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Last updated: 20 July 2026
This article is intended for general information purposes only and does not constitute legal, financial, or professional advice. Laws, regulations, and industry requirements vary by state and territory and change over time. Builders and trades professionals should seek independent advice relevant to their specific circumstances before making business, legal, or financial decisions.
Author: TGB Editorial
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