A recovery in new home building is gaining momentum, according to a monthly survey of Australia’s home builders.
The latest HIA New Home Sales report shows that the volume of new homes sold in Australia fell by 16 per cent in November 2025 yet remains significantly stronger than at the start of the year.
HIA Chief Economist Tim Reardon said that the decline in November follows a period of very strong sales in September and October.
“It is normal to see volatility at the early stages of a recovery”, Reardon added.
The fall was led by a 19.7 per cent decrease in Victoria, followed by New South Wales (down 19.6 per cent), Queensland (down 13 per cent), South Australia (12.4 per cent) and Western Australia (11.1 per cent).
Despite the falls, sales in the three months to November 2025 were 9.4 per cent higher than the previous quarter and 23.7 per cent higher than the same quarter in the previous year. These are the strongest quarterly results since the middle of 2022.
Reardon believes the broader economic environment is increasingly supportive of new home building in 2026.
“The three cuts to the cash rate delivered in 2025 have improved borrowing capacity and restored confidence among buyers who had been waiting on the sidelines”, he noted.
“This rise in confidence is being reinforced by strong population growth, low unemployment and rising established home prices. These factors are encouraging more households to return to the new home market.
“We are seeing enquiry levels rise and contract activity improve.
“Demand is not the challenge in this cycle”, he said, adding that the challenge is delivering enough new homes to meet it.
“The improvement in demand is broadening geographically and is now being observed in the Sydney basin.
“This quarter’s higher volumes were supported by double-digit percentage increases in New South Wales and Victoria compared to the same quarter a year earlier.
“These two markets were the slowest to respond to interest rate cuts, but both are now showing clear signs of sustained improvement.
“Queensland, Western Australia and South Australia continue to report some of the strongest underlying conditions, reflecting faster population growth and more competitive land markets.”
According to Reardon, land price inflation is now the single biggest factor affecting the cost of new home construction.
“In many regions, it is not interest rates that are holding back new supply, but the cost and timing of delivering serviced land. Planning delays and infrastructure bottlenecks continue to slow the release of new lots.
“If governments can reduce the cost of bringing land to market and avoid adding further taxes and charges, this recovery will strengthen and become more sustainable”, he concluded.