SMSF borrowing restrictions weigh on spec home pipeline
Federal restrictions on self-managed super funds borrowing to invest in residential property are starting to affect a broader part of the new-home market, with major builders warning that demand for speculative homes could weaken.
The change is particularly relevant to “spec” homes, which builders finance and construct before securing a signed sales contract. Unlike a traditional new build tailored to a buyer, these properties can be completed more quickly because there is no customer design process, with the dwelling sold at the end of construction.
For SMSF buyers, spec homes had an additional attraction. They could be purchased in a single transaction, helping meet the drawdown restrictions attached to limited recourse borrowing arrangements and avoiding the two-stage house-and-land process required for traditional buyers of new-build homes.
The new rules took effect on Monday. Builders reported a rush of sales to SMSF customers before the change, but industry representatives expect the effects to become more visible in future contracts.
Builders assess exposure to SMSF demand
The Housing Industry Association says the federal budget change has already triggered the cancellation of 2500 sales contracts. NEX Building Group corporate affairs head Brett Lavaring said SMSF buyers had been significant customers for spec homes, which were often built as rental properties.
NEX, which is majority owned by Japan’s Asahi Kasei Homes, is using its parent company’s capital to expand a spec home business intended to build 1000 dwellings by 2030. That figure is equal to about one-third of the company’s 2898 housing starts in FY25.
Lavaring said builders with spec home programs would be affected, with the impact expected to fall more heavily on future contracts than on projects already under way.
Other builders expect a smaller effect. ASX-listed Simonds Group builds about 150 spec homes a year, around one-tenth of the 1526 housing starts it recorded in FY25. Executive chairman Rhett Simonds said the company expected only a small shift because SMSF buyers were not a major sales channel for the business.
Henley Properties has greater exposure. The Melbourne-based builder, owned by Japan’s Sumitomo Forestry Corp, recorded 1984 housing starts in FY25, with spec housing representing between 25 per cent and 30 per cent of its annual volume.
Henley chief executive Antony Blackshaw said the policy would remove virtually all SMSF buyers from that segment, noting that few buyers would be able to fund the full value of a property acquisition in cash.
Supply impact may emerge next year
Industry figures showing the proportion of spec homes purchased by SMSFs were not available, leaving the overall size of the affected market unclear.
Housing Industry Association chief economist Tim Reardon said spec homes once accounted for about 20 per cent of new-home supply. He said the introduction of the GST in 2000 made them more expensive to fund upfront, and by 2020 their numbers had effectively fallen to zero. Higher selling prices later made the model more financially feasible.
Reardon said the new SMSF restrictions would reduce the flow of money into new-home construction and could make the national cabinet’s goal of 1.2 million new homes by mid-2029 harder to achieve.
He said the full effect was unlikely to become apparent until next calendar year, when the current construction pipeline had been completed and any loss of SMSF-linked sales began to show up in lower housing starts.
SOURCE ATTRIBUTION:
Based on reporting by The Australian Financial Review, published 12 August 2026. Source: www.afr.com
