Key Highlights

  • Mirvac sold 429 homes in the September quarter, down from 619 a year earlier.
  • Net residential lot sales fell from 2,117 to 1,506.
  • Mirvac's sales fell about 30.7%, while Stockland's lot sales fell about 28.9%.
  • Weaker sales can make it harder for developers to commit to future housing projects.

Two of Australia's largest residential developers have reported sharp falls in new-home sales, even though new builds now carry a tax advantage for investors. Mirvac and Stockland each sold roughly 30% fewer homes or lots in the September quarter than a year earlier, according to figures cited by the Real Estate Institute of Queensland (REIQ). The slide challenges the expectation that the new-build negative gearing rule would quickly redirect investor demand.

The numbers from Mirvac and Stockland

Mirvac sold 429 homes in the September quarter of 2026, down from 619 a year earlier.

That is a drop of 190 homes, or about 30.7%.

Stockland recorded 1,506 net residential lot sales, down from 2,117. That is a fall of 611 lots, or about 28.9%.

The two businesses operate in different parts of the market. Mirvac is known for apartments and housing in major cities, while Stockland is a large master-planned community developer selling land lots. Both moving in the same direction suggests the weakness is broad rather than confined to one product type.

The tax advantage that was meant to help

Under the Tax Reform No. 1 Act 2026, which is enacted law, negative gearing will be limited to new builds for residential properties bought after 7:30pm AEST on 12 May 2026, from 1 July 2027. Properties held before the cut-off are grandfathered.

In simple terms, an investor who buys a qualifying new dwelling can still deduct a net rental loss against wage and other income. An investor who buys an established property after the cut-off will not get that deduction against other income once the rule applies.

The same law replaces the 50% CGT discount with cost-base indexation and a 30% minimum tax for gains accruing from 1 July 2027. That change applies to both new and established property, so it does not favour new builds in the same way. For some investors, the CGT change may weigh on expected after-tax returns regardless of the type of property.

The policy assumption was that tilting the tax treatment would draw investors towards new stock and support construction. The developer sales figures suggest that, at least so far, other forces are more effective.

Why Demand is falling anyway

The most obvious headwind is price. The Reserve Bank of Australia (RBA) said in its November Statement on Monetary Policy that national housing prices were 4.7% below their recent peak in September, and that the fall since March was mainly due to monetary policy and tax changes in the federal budget.

Cotality's October index showed national values 6.7% below the March peak, about $63,400 off the median dwelling.

Interest rates have also risen. The RBA lifted the cash rate to 4.85% on 3 November, raising the holding cost of any geared purchase.

The RBA reported that HIA new home sales had "declined materially", with builders citing fewer enquiries and lower conversion rates. That points to a slowdown across the new-home market, not just at two listed developers.

Industry groups are already warning about the consequences. The REIQ's Antonia Mercorella said: "Today's weaker demand risks becoming tomorrow's housing shortage."

The REIQ argues that the new-build negative gearing rule ignores how investors judge returns over the whole life of an investment. In its view, a Tax deduction does not compensate for weaker Capital growth, and "some may choose not to invest in housing at all".

This is an industry argument rather than an official finding, but it highlights a real point. Deductions only reduce the after-tax cost of a loss. They do not create a return if the asset itself falls in value.

Hypothetical example: deduction versus price movement

Hypothetical example: an investor buys a new townhouse for $650,000 after the 12 May cut-off. From 1 July 2027, assume costs exceed rent by $10,000 a year and the investor has a combined marginal rate of 39%, including the 2% Medicare levy.

Each year, the deduction could reduce tax on other income by about $3,900 ($10,000 × 39%). Over five years, that adds up to about $19,500, ignoring timing and interest effects.

Now assume the townhouse ends that five-year period worth 3% less than the purchase price. That is a fall of $19,500 ($650,000 × 3%), wiping out the cumulative tax benefit in this example.

The investor would also still have funded the $10,000 annual shortfall themselves, less the tax saved. The figures are invented and simplified, but they show why a tax concession alone may not shift behaviour in a falling market.

The Supply risk

Lower presales can delay or cancel projects because developers often need a level of sales before lenders will fund construction. That is the link the REIQ draws between today's weak sales and future shortages.

The supply backdrop is already tight. Dwelling approvals totalled 208,181 in the year to August, below the 240,000 a year needed to reach the Housing Accord target of 1.2 million homes by 2029. Completions are running at about 175,000 a year, according to the National Housing Supply and Affordability Council.

The RBA forecasts dwelling Investment to fall 2.8% in 2027 and 3.5% in the year to June 2028. Builders in its liaison program cited "higher interest rates, tax reforms and broader economic uncertainty".

There is one more encouraging signal. The ABS reported that apartment approvals rose 25.6% in original terms in September, although it did not link the rise to tax changes. One month of approvals data is not enough to show a lasting shift, but it is worth tracking alongside developer sales.

What to watch

The coming weeks will offer more evidence on whether new-home demand is stabilising.

- The Senate Economics Legislation Committee reports on the Tax Reform No. 3 Bill on 13 November, a separate package that includes property-related measures. - Cotality's December home value index on 1 December will show whether price falls are easing. - MYEFO, due in December, may update Revenue estimates for the negative gearing and CGT changes. - 1 July 2027 is when the new-build rule and CGT changes take effect.

Developers' next quarterly updates will be the clearest test of whether the tax advantage begins to show up in sales.