Is It Getting Harder to Build New Homes? Five Conditions in the June Quarter 2026

Five conditions for building

Delivering a new home depends on several things lining up: land that is worth developing at current prices and building costs, finance to buy the land and build, the roads, water and power that make land usable, and builders, materials and labour to do the work. The index brings five measures of those conditions together at equal weight. Each is a standard score against its own history, and those that read higher when conditions are easier are reversed, so that a higher index reading always means more friction.

Each component reading is a standard score in its own direction; components that read higher when conditions are easier enter inverted, so that a higher index reading means more friction. Each carries a weight of one-fifth. APN Future Development Pipeline Index™ (24400). APN calculation based on Australian Bureau of Statistics and Australian Prudential Regulation Authority data.

In the June quarter the feasibility measure supplied most of the friction, +0.480 of the +0.3117 total. Development finance, still growing faster than usual, took 0.125 off. The other three sat close to their usual levels.

What changed since March

The reading rose by 0.39 between the March and June quarters. Development finance added +0.214: growth in land development limits and construction lending slowed after the March quarter, when the finance measure read the highest in its record, as set out in Money for Building: Bank Credit for Land Development and Construction Since 2011. The replacement cost gap added +0.134, because dwelling prices grew more slowly while building costs grew faster. Feasibility added +0.066 and supply chain strain +0.021. Only infrastructure moved the other way, taking off 0.041 as public engineering work grew a little faster.

Feasibility at the lowest in its record

The feasibility measure compares the average dwelling price, less the cost of building a new dwelling, with the average value of residential land per dwelling. When the result falls, the value left for land after paying to build is shrinking relative to what land is worth. The ratio peaked in December 2021 and has fallen in most quarters since. At 0.7061 in June 2026 it was the lowest of the 60 quarters since September 2011, a standard score of −2.3978.

The ratio’s level has no threshold at which building becomes unviable. Its price and land figures average all existing dwellings, while its cost figure is for new dwellings, so it is read only against its own history.

Prices and building costs

The replacement cost gap compares how fast dwelling prices are rising with how fast building costs are rising, each against its own usual pace. In the March quarter prices were growing 10.0% a year and input costs for house building 2.5%. In June, price growth eased to 6.8% and cost growth rose to 3.8%, narrowing the gap. A narrowing gap means less room between the market value of a home and the cost of building one, which the index counts as more friction. Because the mean dwelling price includes land, the gap largely tracks land values against building costs.

Infrastructure and the supply chain

Public engineering work on roads, water, sewerage and electricity grew 4.3% over the year to June, in current prices, a little below its usual pace. The supply chain measure combines three inputs, each close to or below its usual level: input costs for house building were growing at about their usual rate, the construction job vacancy rate was 1.48% against a slightly higher norm, and dwelling approvals per million dollars of residential work done were below average, a sign of less congestion in the pipeline rather than more. How approvals turn into commencements is covered in From Approval to Start: The Conversion Gap.

Where the reading sits

At +0.3117σ, the June quarter reading is higher than 46 of the other 55 quarters since September 2012, and higher than every quarter since June 2023. The highest readings in the record were in early 2019 and late 2022, both times when dwelling prices were falling.

What this does not show

The index composes five of the six components planned for it; a measure of community objection to development is not yet included. Building input costs reach it through two components, the supply chain measure and the replacement cost gap, so cost movements carry more than one component’s weight. The measures are national and do not show conditions in any city or region. Several are in current dollars. The index describes conditions for delivery; it does not forecast how many homes will be completed.

Findings are presented on the basis of data and evidence alone.