We’ve already looked at where Sydney’s knockdown rebuild activity is concentrated. A new KPMG analysis, released 5 October 2026 and built on ABS national accounts data, answers a different question: what’s actually happening to the trend itself, and the real story in NSW is more interesting than a simple decline.
What KPMG’s Data Actually Shows
Nationally, investment in new builds rose 20% over the last four years, while spending on one-for-one knockdown rebuilds fell 32% over the same period. Renovation spending has stayed strong too, up almost 5% in the past year to $56.2 billion nationally, close to its 2021-22 peak.
In New South Wales specifically, 2025-26 marked a real turning point: new dwelling investment overtook renovation spending as the state’s largest housing investment category, reversing the position recorded back in 2021-22, when renovation spending had overtaken new builds for the first time since 2012-13.
The Part That Doesn’t Fit a Simple “Rebuilds Are Dying” Story
Here’s what’s easy to miss if you only read the national headline: in NSW, one-for-one replacement spending (straight knockdown rebuilds, not larger multi-dwelling projects) nearly doubled between 2021-22 and 2025-26. That’s not a market in decline, that’s a market that grew substantially even as new-build investment grew faster around it.
The real takeaway isn’t “nobody’s doing knockdown rebuilds anymore.” It’s that NSW homeowners now have more options genuinely competing for the same decision: a straight rebuild, a full renovation, or building new on a block they already hold, and all three categories are seeing real investment growth at once. KPMG’s Terry Rawnsley put it simply: “People are rethinking their options and prioritising what makes economic sense.”
Where the Money Is Actually Going in NSW
Renovation spending in NSW is heavily concentrated: inner heritage areas and popular coastal locations account for $2.1 billion, 48% of all NSW renovation spending statewide. Rawnsley specifically named the Northern Beaches and Sutherland Shire as areas continuing to attract significant renovation activity, both places where heritage controls, coastal setbacks, and strict character requirements often make a full rebuild harder to get approved than a renovation, even when the underlying structure might otherwise justify one.
That pattern lines up with what we see on the ground: heritage-affected and coastal-constrained suburbs lean toward renovation almost by necessity, while established middle-ring suburbs with larger, less-restricted blocks remain strong knockdown rebuild territory, which is exactly where NSW’s near-doubling of one-for-one replacement spending is coming from.
What This Means If You’re Deciding Right Now
The practical takeaway from this data isn’t which option is “winning” nationally, it’s that your specific suburb and block matter more than any statewide trend. A heritage-affected block in a renovation-heavy pocket faces a different real decision than an unrestricted block in an established middle-ring suburb, even if both are in Sydney.
What has genuinely changed is that homeowners have more viable paths than a few years ago, and KPMG’s own data confirms all three, new builds, renovations, and straight rebuilds, are seeing real investment growth in NSW at the same time. That’s a genuinely good position to be deciding from, since it means the right call is more likely to come down to your actual site and goals rather than a shortage of good options.
Frequently Asked Questions
Are knockdown rebuilds declining in Sydney?
Not straightforwardly. KPMG’s October 2026 data shows one-for-one replacement spending in NSW nearly doubled between 2021-22 and 2025-26, even though new-build investment grew faster and overtook it as the largest category. Knockdown rebuilds are growing in absolute terms, just not as fast as new builds overall.
What’s driving renovation spending in NSW right now?
It’s heavily concentrated in inner heritage areas and coastal locations, which account for 48% of all NSW renovation spending. KPMG specifically named the Northern Beaches and Sutherland Shire as continuing hotspots, both areas where heritage and coastal planning controls often favour renovation over rebuilding.
Has new-build spending really overtaken renovation in NSW?
Yes, as of 2025-26, reversing the position from 2021-22, when renovation spending had overtaken new builds for the first time since 2012-13. The swing happened within four years.
Where does this data come from?
KPMG Australia’s analysis, released 5 October 2026, is built on ABS June Quarter 2026 National Accounts data, with suburb and LGA-level renovation figures based on 2025-26 approval data.
If you’re weighing up a knockdown rebuild against a renovation on your own block, our guide to knockdown rebuild vs renovation covers how to make that call for your specific site.