Interest in new builds rebounds as incentives expand and cost pressures ease
Buyer interest in new housing has lifted to its strongest level in four years, with activity in January signalling renewed interest in the construction market after a prolonged slowdown.
Acording to data from real estate listings company REA Group, searches in the New Homes section of its realestate.com.au platform reached their highest reading since January 2022. The rebound follows an extended period of weakness for the building sector as borrowing costs and construction expenses surged.
“New home demand is picking up after several very difficult years for the construction industry,” said Anne Flaherty, senior economist at REA Group. “We are seeing more prospective buyers return to the market as cost pressures ease and policy support for first-home buyers expands.”
Interest in new housing last peaked in 2020, when the Federal Government’s HomeBuilder program – a $25,000 grant designed to stimulate the residential construction industry during the covid-19 recovery – helped trigger a surge in building contracts and project launches. That pipeline of work carried through much of 2021.
Conditions then deteriorated from 2022 as materials and labour costs escalated at an unusual pace, interest rates rose quickly, and cost overruns became more common. A series of builder failures further undermined confidence, with some purchasers becoming wary of committing to off-the-plan projects or house-and-land packages.
The latest data suggest some of those headwinds are easing. While building costs remain elevated, the rate of increase has slowed and is now closer to long-run averages, reducing uncertainty for both lenders and borrowers around total build costs and completion timelines.
“Greater predictability around construction pricing is encouraging more buyers to explore new builds again,” Flaherty (pictured right) said. “For many households, the ability to budget with more confidence is just as important as the headline price.”
Government support is also playing a larger role. Several recent initiatives aimed at first-home buyers have come into effect, including the Australian Government 5% Deposit Scheme, which commenced in October 2025, and the Help to Buy Scheme, which started in December 2025. These join existing state-based measures such as stamp duty relief and first home owner grants, which in many jurisdictions offer more generous benefits for new properties than for established dwellings.
Eastern states surging
Queensland is currently drawing the strongest interest among those searching specifically for new homes, accounting for 31% of all new home searches in January. This is significantly above its share of combined new and established buy searches, where it represents 24% and ranks behind New South Wales on 27% and Victoria on 26%.
For new home searches alone, New South Wales accounted for 20% of activity, followed by Victoria at 18%, placing all three eastern states at the centre of current demand.
Buyer preferences within the new homes segment are heavily weighted toward house-and-land packages. Over the six months to January 2026, 80% of new home searches were for house-and-land product, compared with 13% for new units and 7% for land-only options. By contrast, among those searching for established homes, 40% of searches were for units, underlining the different composition of demand in the new and existing markets.
The pattern reflects an ongoing tilt towards larger dwellings, particularly among family households and first-home buyers who have been priced out of inner and middle-ring suburbs and are looking to new estates on the urban fringe.
An additional drawcard for some buyers is the ability to secure a contract price before construction is completed, providing a measure of protection in an environment where dwelling values are still expected to rise over the medium term.
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