Three months ago, loans to build new homes were rising while the rest of the market went backwards. The September quarter figures show whether that held, and where the record fall in home lending actually landed.
Construction loans fell sharply in the September quarter
Lending to build new homes fell sharply in the three months to September. Owner occupiers took out 8,114 new loans for the construction of dwellings, down 14.4 per cent on the June quarter. Investors took out 7,267, down 11.8 per cent.
The figures come from the Australian Bureau of Statistics Lending Indicators release for the September quarter of 2026, published on 11 November. All figures here are seasonally adjusted new loan commitments and exclude refinancing unless stated.
Combined, construction loans fell 13.2 per cent, from 17,723 to 15,381. In August we reported that lending to build was climbing while the wider market fell. That run has ended.
The record fall came mostly out of established housing
Total home lending fell 15.0 per cent to 111,878 loans. By value it fell 15.5 per cent to $81.2 billion, the largest quarterly fall since the series began in 2002.
Investors drove it. New investor loans fell 30.6 per cent to 35,301, the largest quarterly fall on record. Investor loans to buy existing dwellings fell 35.6 per cent to 25,843, and are down 46.2 per cent on a year earlier.
On our calculations, 14,293 of the 15,544 fewer investor loans this quarter came out of existing dwellings. That is 92 per cent of the fall.
Construction lending looks very different over the same twelve months. Investor construction loans are down 2.8 per cent on the September quarter of 2025, and owner occupier construction loans are down 4.3 per cent. By value, both are slightly higher than a year earlier: owner occupier up 0.6 per cent to $5.75 billion, investor up 2.5 per cent to $5.14 billion.
Investors did not rush into new builds. They stopped buying existing homes far faster than they stopped building.
New builds now take a record share of investor lending
Only one investor loan purpose went up in the quarter. Loans to buy newly erected dwellings rose 1.9 per cent to 2,473.
Put construction and newly erected purchases together and new builds made up 27.6 per cent of all investor loans in the September quarter, on our calculations from ABS Table 13. That is up from 21.0 per cent in June and 17.2 per cent a year earlier. The previous high in a series that starts in September 2019 was 22.4 per cent, in the June quarter of 2020.
That record needs reading carefully. The share rose because the total collapsed, not because more investors are building. The number of investor new build loans fell 8.7 per cent in the quarter, from 10,668 to 9,740.
Investors did not rush into new builds. They stopped buying existing homes far faster than they stopped building.
Construction loan or newly erected purchase?
The ABS counts two kinds of new build lending separately. A loan for the construction of dwellings finances a household building a new home. A loan for the purchase of a newly erected dwelling finances a household buying a home that has already been built. Neither includes finance taken out by builders or developers, which the ABS records as business lending.
The June quarter figures have been revised down
The ABS has revised the June quarter since our August coverage. We reported 8,468 investor construction loans, a series high. That figure now reads 8,240. It remains the series high, but the June increase was smaller than first published. Owner occupier construction loans for June have been revised from 9,975 to 9,483.
The choice of series matters too. In original terms, before seasonal adjustment, owner occupier construction loans fell 21.1 per cent and investor construction loans 16.3 per cent. The ABS trend estimates show falls of 4.6 and 5.5 per cent. The seasonally adjusted figures sit between the two, and trend estimates are revised as each new quarter arrives.
Every state fell in the quarter, but the annual picture splits
Owner occupier construction loans fell in every state and territory in the September quarter. Among the larger states, Victoria fell furthest, down 24.9 per cent, followed by Queensland at 19.0 per cent.
Over the year the states part ways. Owner occupier construction loans are up 11.6 per cent in South Australia and 8.3 per cent in Western Australia. They are down 16.6 per cent in Queensland and 12.8 per cent in Victoria, while New South Wales is close to flat, down 0.2 per cent.
Investor construction loans follow a similar pattern. They are up over the year in South Australia (13.0 per cent) and Western Australia (2.5 per cent), down in New South Wales (13.7 per cent) and Victoria (6.0 per cent), and close to flat in Queensland. Counts in Tasmania and the territories are too small to read with confidence.
Land loans point to a thinner pipeline further out
Loans to buy residential land fell harder than construction loans. Owner occupier land loans fell 14.0 per cent in the quarter and 21.7 per cent over the year. Investor land loans fell 15.6 per cent and 19.8 per cent.
Land is usually bought before a build is financed, so a fall in land lending tends to reach a builder’s pipeline of work a step behind. Lending for alterations and additions also fell, down 8.1 per cent for owner occupiers and 15.4 per cent for investors.
The Reserve Bank’s November Statement on Monetary Policy forecasts dwelling investment to grow 5.1 per cent over 2026, then fall 2.8 per cent over 2027 and 1.8 per cent over 2028. Master Builders Australia chief economist Shane Garrett said the drop in housing finance signals less building activity to come, from approvals through to completions.
Business construction finance moved the other way
Lending to businesses for construction rose strongly. Fixed term business loans for construction rose 27.6 per cent to $17.2 billion in the quarter, and are up 51.8 per cent on a year earlier. The portion for construction of dwellings rose 23.0 per cent to $8.3 billion.
That series swings from quarter to quarter. It was $7.7 billion in the March quarter of 2025. Even so, builders working with developers on business finance are looking at a different market from builders who rely on household clients.
The ABS points to more than interest rates
The ABS said lending fell across every borrower type in the September quarter, with the sharpest decline among investors. Its head of finance statistics, Dr Mish Tan, said investor activity appeared to be influenced by more than rising borrowing costs, pointing to possible tax changes and expectations of lower house prices.
Those explanations are not mutually exclusive, and the data cannot separate them. What it does show is where the fall landed: overwhelmingly in established housing, with construction lending down hard in the quarter but holding close to last year’s level.
The Good Builder Take
The record fall will carry the headlines. For builders, the more useful number is quieter: 15,381 construction loans signed in the quarter, down 13.2 per cent. That is work that either reaches site through 2027 or does not.
The fall in land loans says the pipeline behind it is thinner again. New builds taking a record share of investor lending is real, but it is a share of a much smaller market.
Frequently asked questions
Yes. ABS seasonally adjusted figures show owner occupier loans for the construction of dwellings fell 14.4 per cent to 8,114 and investor construction loans fell 11.8 per cent to 7,267 compared with the June quarter. Over the year, both are down less than 5 per cent.
New investor loan commitments fell 30.6 per cent to 35,301, and their value fell 32.3 per cent to $24.7 billion. Both are the largest quarterly falls on record. Most of the fall came from loans to buy existing dwellings, which fell 35.6 per cent.
On our calculations from ABS Table 13, loans for construction and for buying newly erected dwellings made up 27.6 per cent of investor loans in the September quarter, the highest share since the series began in 2019. The share rose because total investor lending fell sharply, not because more investors were building.
The ABS revises earlier quarters as lenders update their data. June quarter investor construction loans were first published as 8,468 and now read 8,240. Owner occupier construction loans for June were revised from 9,975 to 9,483.
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- Developer Enquiries Have Fallen 71 Per Cent. Approvals Have Not Caught Up Yet.
Last updated 12 November 2026, using ABS Lending Indicators for the September quarter 2026, released 11 November 2026.
General information only. This article is general information and does not take into account your circumstances. It is not financial, legal or professional advice. Figures are drawn from public sources current at the date of publication and may be revised.
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