New dwelling inflation eased to 4.7 per cent in the year to September, down from 5.4 per cent in August. Behind the slowdown is a market where some builders are still lifting base prices and others are cutting deals to keep sales moving.
New home prices did not move in September.
The Australian Bureau of Statistics (ABS) recorded no change in new dwelling prices for the month, after a 0.2 per cent rise in August. Annual new dwelling inflation fell to 4.7 per cent, from 5.4 per cent in the 12 months to August and 5.8 per cent in June.
A flat month does not mean prices stopped rising. The ABS said some project home builders raised base prices in September, but that was offset by other builders increasing discounts and promotional offers in response to slowing new demand.
That split is the real story in this release.
What did the September CPI show for new dwellings?
Headline inflation went the other way. The Consumer Price Index rose 4.3 per cent in the 12 months to September, up from 4.0 per cent in August. Automotive fuel prices rose 9.4 per cent in the month on higher world oil prices.
Housing was again the largest contributor to annual inflation, rising 5.2 per cent. The ABS named new dwellings, electricity and rents as the main drivers within the group.
Electricity rose 12.8 per cent over the year, which the ABS put down largely to the end of Commonwealth electricity rebates. Rents rose 3.6 per cent.
For new dwellings, the ABS said the annual rise reflected builders passing on higher costs for materials and labour. What changed in September is the monthly picture underneath it.
Why are some builders raising prices while others discount?
The ABS described both behaviours in the same paragraph.
On one side, project home builders have been raising base prices to pass through higher labour and materials costs over the year. That explanation has run through every recent release.
On the other side, September brought something new. In the July and August releases, the ABS attributed the new dwelling rise to base price increases alone. September is the first of the three to mention builders increasing discounts and promotions.
Both responses make sense depending on where a business sits. A builder with a full order book and rising trade costs has reason to lift prices. A builder watching enquiry thin out has reason to protect volume.
The index nets the two together. When they roughly cancel out, the result is a zero.
What the new dwellings index measures
The ABS new dwelling purchase by owner occupiers index tracks the price of newly built homes. For houses, the ABS collects prices on project homes, which keeps the value of land out of the measure. Discounting and promotional offers move the index alongside base price changes, so a month where some builders lift prices and others discount can show no change at all.
Where in the country is the split showing?
The capital city data shows how uneven the market has become.
Five of the eight capitals recorded no change in new dwelling prices in September: Melbourne, Adelaide, Perth, Darwin and Canberra.
Brisbane was the only capital where prices fell, down 0.4 per cent in the month. Annual new dwelling inflation in Brisbane has dropped to 6.4 per cent, from 9.1 per cent in June.
Sydney went the other way. Prices rose 0.3 per cent in September, the largest monthly increase of any capital, and annual inflation held at 4.9 per cent.
Elsewhere, the annual rate has come down quickly from mid year peaks. Adelaide fell to 5.0 per cent from 9.1 per cent in June. Perth eased to 6.7 per cent from 8.4 per cent.
Hobart remains the highest at 8.8 per cent. Melbourne is the lowest at 2.8 per cent.
These figures cover the eight capital cities only. Regional markets are not captured in the CPI.
Is the slowdown bigger than the annual figure suggests?
The annual rate is a 12 month number, so it still carries the strong increases from earlier in the year.
Our calculation from the ABS index numbers shows new dwelling prices rose about 2.0 per cent in the three months to June. In the three months to September, they rose about 0.6 per cent.
The annual figure says new home prices are still rising. The last three months say the pace has slowed sharply.
The annual figure says new home prices are still rising. The last three months say the pace has slowed sharply.
If the monthly readings stay near flat, the annual rate will keep falling as the monthly increases from late 2025 and the first half of 2026 drop out of the calculation.
How does this sit against building approvals?
Private house approvals tell a stronger story, at least on volume, even though total dwelling approvals fell 6.1 per cent in August as approvals for private dwellings excluding houses dropped 21.2 per cent.
The ABS reported private sector house approvals rose 3.7 per cent to 10,885 in August. It was the eighth consecutive month above 10,000, and approvals were up 18.4 per cent on August 2025.
The two series measure different moments in a job. For project homes, building approval usually comes after a contract is signed, so approvals largely reflect sales made in earlier months. The price index reflects what builders are charging now.
Read together, the pipeline already sold remains solid, while the ABS describes demand for new sales as slowing. That is a shift from what we covered when new dwelling inflation hit 5.8 per cent in June, when approval values and prices were both climbing. In September, price has stopped keeping pace.
What does a softer price index mean for builder margins?
The CPI measures what buyers pay. It does not measure what builders pay.
The ABS has been clear that base price increases over the year were a pass through of higher labour and materials costs. Where a builder discounts while those costs are still sitting in the job, the gap comes out of margin rather than out of cost.
That is the pressure point behind the split. Builders lifting base prices are protecting margin and accepting some risk to sales. Builders discounting are protecting sales and accepting some risk to margin.
For businesses pricing work today, the question is which of those risks the balance sheet can carry. It is a question that sits at the centre of running a building business through a turning market.
The Good Builder Take
One flat month is not a turning point on its own. Monthly CPI data moves around, and a single zero can be followed by a rise.
But the language in the ABS release has changed, and that matters more than the number. Through the middle of 2026, the explanation was simple: costs went up and builders passed them on. September is the first of the recent releases to describe builders using discounts to respond to slowing demand.
A market where builders’ costs have climbed over the year and buyers are getting harder to win is a margin squeeze, whichever way an individual builder chooses to price. The October figures, due from the ABS on 25 November, will show whether September was a pause or the start of something longer.
Frequently asked questions
New dwelling prices rose 4.7 per cent in the 12 months to September 2026, down from 5.4 per cent in the 12 months to August, according to the ABS. Prices were unchanged in the month of September.
The ABS said some project home builders raised base prices in September, but this was offset by other builders increasing discounts and promotional offers in response to slowing new demand.
Hobart recorded the highest annual new dwelling inflation at 8.8 per cent in September 2026. Melbourne recorded the lowest at 2.8 per cent. Brisbane was the only capital where prices fell in the month, down 0.4 per cent.
No. For houses, the ABS collects prices on project homes, which excludes the value of land from the measure.
The ABS is scheduled to release the Consumer Price Index for October 2026 on 25 November 2026.
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Last updated: 28 October 2026. Figures drawn from the ABS releases Consumer Price Index, Australia, September 2026 (published 28 October 2026) and Building Approvals, Australia, August 2026 (published 30 September 2026).
General Information Only: This article is general information only and does not take into account the circumstances of any business, contract or project. It is not financial, legal or pricing advice. Seek professional advice before making decisions based on this information.
Author: TGB Editorial
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