A year ago, fewer than one in ten property professionals named interest rates as a barrier to starting new housing projects. This quarter it was 58 per cent. Construction costs have not moved off the top of the list, and first home buyers are buying a smaller share of what gets built.

In NAB’s survey, construction costs have been the top barrier to starting new housing in every quarter of the past year. As recently as June, delays getting planning permits sat second.

The latest NAB Residential Property Survey.pdf) suggests that picture has changed.

In the September quarter, 58.3 per cent of property professionals said interest rates were a barrier to starting new housing developments. That is up from 39.6 per cent in the June quarter. In September 2025 it was 9 per cent.

Rates now sit second on the list. NAB says they have overtaken delays getting planning permits, at 54.1 per cent, for the first time since the December quarter of 2023.

Construction costs are still first, named by 77 per cent of respondents. That is unchanged from June, and from a year ago.

For builders, the combination matters more than either number on its own. The cost of building has not stopped being a problem. The ability of buyers to pay for it has become one too.

What changed in the barriers to new housing this year?

Each quarter, NAB asks a panel of property professionals, mostly agents, developers, fund managers and investors, to name the main barriers to starting new housing projects. Around 228 took part this quarter.

A year ago, permit delays were the second biggest barrier, named by 68 per cent. By June that had eased to 45 per cent. It rose again to 54.1 per cent in September, but rates had already climbed past it.

Interest rates went from 9 per cent, to 39.6 per cent, to 58.3 per cent over those three readings. Concern about whether house prices are sustainable rose from 11 per cent a year ago to 33 per cent.

The Reserve Bank lifted the cash rate to 4.60 per cent on 29 September, after three increases earlier in the year. In the same statement, the Board said housing prices had fallen in most capital cities and new housing loans had declined noticeably.

The survey report does not say when responses were collected, so it is not clear how many respondents answered after the September decision. Either way, three rate rises had already landed.

What the NAB barrier figures measure

Each quarter, NAB asks property professionals which factors are barriers to starting new housing developments. Respondents can name more than one, so the percentages do not add to 100. A rise means more respondents named that factor. It does not measure how severe the barrier is, or how many projects it affected.

Why are construction costs still on top at 77 per cent?

Because costs are still rising.

The ABS producer price indexes show the prices house builders charge rose 2.0 per cent in the June quarter, the largest quarterly rise since September 2022. Over the year they were up 5.9 per cent, the highest annual rise since June 2023.

The ABS linked the quarter to higher fuel and freight costs tied to the Middle East conflict, with many builders passing fuel impacts on to customers. It also pointed to continuing shortages of skilled labour, particularly bricklayers, carpenters and concreters.

Over the year, house construction output prices rose 11.5 per cent in Tasmania, 8.8 per cent in Western Australia, 8.5 per cent in South Australia and 8.0 per cent in Queensland. Victoria was lowest at 3.7 per cent.

So the unchanged 77 per cent is not a sign costs have settled. What moved was everything stacked on top of them.

The cost of building has not stopped being a problem. The ability of buyers to pay for it has become one too.

Are first home buyers still buying new homes?

First home buyers made up 25.2 per cent of buyers in new housing markets in the September quarter. That is down from 38.6 per cent in June and 40.7 per cent in March.

Owner occupiers who are not first home buyers lifted their share to 49.8 per cent, from 37.8 per cent. NAB says that is well above the long term average.

Looking ahead, respondents expect first home buyers purchasing to live in to keep losing share of new property sales over the next 12 months, with a net balance of minus 28. Every other buyer group was also expected to lose share on balance, which reads more like general caution among respondents than a clear handover from one group to another.

The shift is happening while support for first home buyers of new homes remains in place. In Queensland, the $30,000 First Home Owner Grant continues for eligible contracts signed from 1 July 2026, for new homes valued under $750,000.

How much weight can the survey carry?

It is a sentiment survey, not a count of projects. Builders are not the panel.

The state results also rest on small numbers of respondents, so this piece sticks to the national results.

There are early signs in harder data, at least for higher density housing. On ABS figures, approvals for private dwellings excluding houses fell 21.2 per cent in August in seasonally adjusted terms, though that series moves sharply from month to month. Private house approvals rose 3.7 per cent and were 18.4 per cent higher than a year earlier. We looked at how higher rates are reshaping which projects stack up earlier this month.

What does a two sided squeeze mean for builders?

Costs and rates press on different parts of a building business. Costs sit on the quote. Rates sit on the client.

When costs are the main problem, the pressure shows up in margins, in fixed price contracts written before prices moved, and in cash flow through the build.

When rates join in, the pressure moves earlier. It shows up in enquiries that do not convert, finance approvals that come back smaller, and clients who pause between signing and starting.

The buyer mix points the same way. A buyer with less equity has less room to absorb higher repayments, and the survey shows first home buyers stepping back while owner occupiers who have bought before take a larger share. A pipeline built on that second group is likely to look different in price point, design and how quickly decisions get made.

Our recent look at the construction data underneath the headlines found house builders’ prices rising faster than materials. The NAB survey adds the other half of the picture. The barrier in second place is now about the buyer, not the build.

What comes next for costs and rates?

Two releases in the next three weeks will test the shift. The ABS September quarter producer price indexes are due on 30 October. The Reserve Bank’s next decision follows on 3 November.

We will be reading both alongside the rest of our Australian construction industry trends coverage.

In NAB’s survey, construction costs are still the barrier most respondents name. They are just no longer the whole story.

THE GOOD BUILDER TAKE

The headline number in this survey is the jump in rates. The more telling one is the 77 per cent, the same as a year ago. Rates can change at a single Reserve Bank meeting. A cost base that has been the top barrier for this long has no equivalent switch, and new home demand is now being shaped by both at once.

Frequently asked questions

Related articles

• At 4.6 Per Cent, the Feasibility Squeeze Is Reshaping Australia’s Building Pipeline
• The Construction Data Nobody Sees Is Starting to Tell a Different Story

Last updated 19 October 2026. NAB figures from the Residential Property Survey Q3 2026. ABS price figures current to the June quarter 2026 release; the September quarter release is due 30 October 2026.

General Information Only. This article provides general information about the Australian construction industry and is not financial, legal or professional advice. It does not take into account your objectives, financial situation or needs. Figures are drawn from the sources cited and may be revised. Seek advice from a qualified professional before making decisions based on this information.

Author: TGB Editorial