Construction Finance runs a lot like a dating show. Contestants show up with polished profiles and long resumes. Lenders run background checks, sit through the pitch and try to work out who's serious and who's just here for the exposure. Nobody moves to the next round on charm alone.

Approvals are climbing, but completions are not keeping pace. That mismatch, more than any single rate move or policy announcement, is shaping how brokers approach construction finance right now.

Cost pressures have eased from their post-pandemic peak, but insolvency rates across the building sector remain elevated, and lenders are responding by tightening how they assess delivery risk rather than pulling back from the market altogether. The tension running through construction finance right now isn't a lack of demand. It's whether projects can actually get built

"Dwelling approvals have improved compared with 12 months ago, but the recovery remains uneven," he says. Detached housing has held up better than apartments and medium-density projects, and the output side of the ledger is the real worry. "Completions are the main concern, with the lowest number of homes completed in 2025 in 12 years," Buchanan says. Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, has watched the same conditions impact the industry over the past year. "The past 12 months have tested the sector, with input cost volatility and supply chain reliability creating challenges for borrowers, builders and lenders," he says.

"Encouragingly, we are now seeing those conditions begin to stabilise, which should support a more active and confident market over the period ahead," Bannister says.

Colin Robinson says "The construction finance market remains challenging, with a number of competing influences shaping the environment,". "Global events … have placed upward pressure on certain construction costs, so while overall market conditions have softened, cost volatility remains an important consideration for developers and lenders alike." Arnold notes, "The construction finance market remains active, but participants are operating with greater discipline than they were 12 months ago. The focus has shifted from growth at all costs to execution, risk management and project delivery."

Many developers and borrowers are now leaning towards banks and lenders that can provide certainty and have specialist expertise within the construction space. "Increasingly, borrowers aren't choosing between banks and non-banks based purely on price. They're choosing the lender best equipped to help them deliver the project successfully," says Bannister.

with borrowers pushing for certainty over price many smaller non-bank lenders are increasing their market share as major banks appetite is becoming more selective. Meaker says "Non-banks are well positioned to support borrowers whose circumstances may not fit traditional bank policy, particularly self-employed and alt doc customers who can struggle to access construction finance through major banks."

Meaker points to the 2026 Federal Budget as a genuine turning point for investor demand. "Importantly, recent tax changes announced in the 2026 Federal Budget are likely to direct more investor demand toward new housing stock," he says. The scale of the supply gap gives that shift some urgency. "Australia also remains well behind the pace required to deliver the National Housing Accord target of 1.2 million homes by 2029, which reinforces the ongoing need for funding solutions that can help bring new housing supply to market," Meaker says.

Bannister takes a more cautious line on how much weight policy should carry in a credit decision, noting, "While policy settings can influence activity and accelerate opportunities, they do not replace sound credit fundamentals."