FHBs increasingly being edged out of new housing market

The 13.4-percentage-point fall coincided with other owner-occupiers expanding their share to 49.8 per cent, from 37.8 per cent, taking their representation well above its long-term average.

The FHB retreat also extended to established housing, where their share fell to 34.4 per cent from 39 per cent. Other owner-occupiers’ share rose for a third consecutive quarter, reaching 45.6 per cent from 43.2 per cent.

Borrowing power takes a mammoth hit

The changing buyer mix comes as higher interest rates substantially constrain purchasing budgets.

Property data provider Cotality estimated that the four Reserve Bank of Australia (RBA) cash rate increases since February, including September’s rise, had reduced a median-income household’s borrowing capacity by almost $90,000, or around 9 per cent.

Cotality research director Tim Lawless said buyers were responding by lowering their budgets or postponing purchases.

“Buyers aren’t just dealing with reduced borrowing power. They’re also weighing up higher repayments and the prospect of further price falls, which is making some reluctant to commit even if they can afford to buy,” he said.

NAB’s survey similarly identified interest rates as the largest constraint on established-home buyers for a second consecutive quarter, followed by access to credit.

Property prices, previously the leading constraint since 2025, ranked fourth, highlighting the prominence of financing pressures.

Beyond borrowing costs, NAB found two-thirds of property professionals considered stamp duty a barrier for first or newer home buyers, adding another major upfront hurdle to entering the housing market.

New housing faces mounting barriers

Financing pressures also extended to development, with the proportion of property professionals identifying interest rates as a barrier to starting new housing projects climbing to 58.3 per cent from 39.6 per cent.

Rates were the second-largest obstacle behind construction costs, which were cited by 77 per cent of respondents.

Meanwhile, NAB’s residential property index dropped 18 points to -4, its first negative reading in six years and third consecutive quarterly decline. Its long-run average is +22.

Weaker house price expectations drove the deterioration, with sentiment softening across most states and territories.

NSW recorded the weakest reading at -22, down from +3, while Queensland fell to -9 from +22, and Victoria slipped to -5 from −3.

Respondents expected house prices to fall 4.2 per cent over the next 12 months, compared with a 2.5 per cent decline forecast in Q2.

[Related: FHB loan sizes jump as rate rises blunt 5% Deposit Scheme saving benefits]