HIA poll finds two-thirds of signed detached home contracts face cancellation under new superannuation lending restrictions
Thousands of signed contracts to build new homes are at risk of cancellation following the passage of legislation restricting self-managed superannuation fund (SMSF) borrowing arrangements, according to new survey data from the Housing Industry Association (HIA).
The industry body, which is now calling on Treasury to publish a housing supply impact assessment, surveyed Australia's largest detached home builders — collectively representing more than 40% of national detached housing construction. Builders currently hold 3,613 signed contracts with buyers using SMSF Limited Recourse Borrowing Arrangements where construction has not yet begun. An estimated 2,415 of those (66.9%) are expected to be cancelled once the legislation takes effect.
HIA estimates the combined effect of contract cancellations and weaker forward sales will reduce detached housing commencements by between 3.5 and 5%, with state governments losing more than $450 million in GST and stamp duty revenue as a result.
More than 70% of builders surveyed reported a decline in investor enquiries since the federal Budget, and nearly 90% expect detached housing commencements to fall during 2026 and 2027.
"The ban on SMSFs building new homes undermines the governments' objective of building 1.2 million homes and improving housing affordability," said Tim Reardon (pictured right), chief economist at the Housing Industry Association.
"The government has made increasing housing supply its central housing policy objective. The question now is whether this SMSF legislation advances that objective or makes it more difficult to achieve. The legislation was passed without a cost/benefit analysis or any publicly available data on how significant the reduction in new home supply would be, as a result of this change."
Reardon said the survey represented the first direct evidence from builders of the legislation's likely effect on supply. "These are not hypothetical future investments," he added. "They are signed contracts to build homes that builders had expected to construct in the next year."
He drew a distinction between investor participation and housing demand. "SMSFs do not live in homes," he said. "They do not create demand for housing. They do provide capital that finances the construction of new housing. Restricting one source of investment does not reduce the number of Australians needing somewhere to live."
HIA also noted the survey covers detached housing only and excludes apartment construction, where investor involvement tends to be higher and pre-sales are commonly required to unlock construction finance. "The total impact on housing supply may therefore be greater than these estimates suggest," Reardon said.
"Treasury should publish a housing supply impact assessment and cost-benefit analysis consistent with the analysis undertaken for the changes to negative gearing and capital gains tax. That assessment should quantify the expected impacts on detached housing, apartment construction, housing affordability and government revenue. The issue extends well beyond superannuation policy. This is ultimately about how housing policy is evaluated."
Reardon said a straightforward test should be applied to all major housing measures. "If increasing housing supply remains the government's objective, then every major housing policy should be assessed against one simple question," he stated. "Will it increase or reduce the future supply of homes? The next step is to transparently measure its outcomes and release that evidence prior to the next election."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
