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In February, new loans for owner occupiers to build a home fell 4.8% to 2732 in seasonally adjusted terms, which is the lowest in Australian Bureau of Statistics records that go back to 2002. This has exacerbated Australia’s housing crisis at a time when builders are more vulnerable than ever.

New home construction loans have been on a downward trend since January 2021. This was due to the HomeBuilder incentive payments offered by the former government that led to a sudden surge in new home commitments of almost 10,000 per month. However, this resulted in a backlog of construction projects, compounded by rising construction costs, which has put immense pressure on residential builders working under fixed-price contracts, leading to some of them going bankrupt. The most recent example is Melbourne-based Porter Davis, which went into liquidation last week.

The declining trend in new home construction loans is a concern for the industry, which is eager to alleviate the country's long-standing housing shortage. The rise in interest rates and building material costs had already contributed to this decline, and the backlog of construction projects has made it worse.