Concerns about rising construction costs have done little to slow buyer demand, with new home sales continuing to gain momentum throughout 2025.
Despite ongoing pressure from higher interest rates, labour shortages, and global uncertainty, buyers are still actively entering the market, encouraged by population growth, low unemployment, and the ongoing shortage of available housing.
The latest Housing Industry Association New Home Sales report revealed sales increased by 17% during March. The figures continue a strong upward trend that has been building since the beginning of the year, with disruptions to fuel supplies and construction supply chains over recent months failing to significantly impact activity.
HIA Chief Economist Tim Reardon says new home sales for the March quarter were 31.9% higher than the same period last year, describing the result as particularly encouraging given broader economic conditions.
“This is a strong result given the impact of two rate increases and heightened global uncertainty,” he says.
The figures highlight the resilience of housing demand even as affordability pressures continue affecting households across the country. Buyers remain motivated by limited housing supply, rising rents, and concerns that waiting longer may only make entering the market more difficult in the future.
Reardon says stronger sales activity in New South Wales and Victoria is particularly positive given both states have experienced relatively low levels of detached housing construction in recent years. Increased buyer confidence in these markets is being viewed as an important sign for future housing supply.
“More broadly, demand for housing remains strong, supported by strong population growth and low unemployment. These structural drivers continue to underpin activity, even as borrowing costs rise,” he says.
Queensland recorded the strongest increase in new home sales during March, continuing its strong run as one of the country’s most active housing markets. Interstate migration, ongoing infrastructure investment, and comparatively affordable housing in some regions continue attracting buyers seeking both lifestyle and long-term growth opportunities.
South Australia, Victoria, and New South Wales also experienced increases in sales activity during the month. Western Australia was the only state to record a decline in new home sales contracts, although conditions there remain relatively solid overall.
While demand remains strong, the building industry is still facing significant challenges responding to the pace of buyer activity. Construction companies continue dealing with elevated costs for both materials and skilled labour, with many industry experts expecting these pressures to persist through 2026.
Builders are also managing delays linked to workforce shortages and supply chain disruptions, which have extended construction timeframes across many projects. The cost of skilled trades remains particularly high as builders compete for limited labour across residential, commercial, and infrastructure developments simultaneously.
Material pricing also continues creating pressure throughout the sector. Although some supply chain conditions have improved compared to previous years, many products remain expensive due to freight costs, international demand, and manufacturing constraints.
As a result, buyers are becoming increasingly cautious around construction contracts, timeframes, and potential cost variations before committing to projects.
Reardon says one of the biggest challenges affecting future housing delivery remains access to shovel-ready land. In many high-demand growth corridors, delays in planning approvals and infrastructure delivery are slowing the release of residential land needed to support additional housing supply.
This issue has become increasingly important as governments and industry groups attempt to address the nation’s broader housing shortage. Strong buyer demand alone is not enough to solve supply challenges without improvements in land availability, infrastructure investment, and planning efficiency.
The strength of the new home market also reflects ongoing population growth and changing lifestyle preferences. Many buyers continue targeting growth corridors and lifestyle regions where new housing estates offer improved transport links, schools, retail centres, and community infrastructure.
At the same time, rising rental costs and record-low vacancy rates are encouraging some households to pursue home ownership sooner rather than later. Concerns that construction costs and established housing prices may continue increasing are also contributing to buyer urgency in several markets.
For investors, the market remains attractive because tight rental conditions are supporting stronger rental yields in many growth areas. Newly built homes in well-positioned locations continue attracting interest from buyers seeking both income and long-term capital growth potential.
Although the construction industry continues facing challenges, the latest figures demonstrate that underlying housing demand remains extremely strong. Population growth, employment stability, and ongoing supply shortages are continuing to support market activity despite broader economic uncertainty.
As housing affordability and supply remain major national issues, the performance of the new home sector will continue playing a critical role in shaping the future of the property market.
