The 2026 federal budget included a number of big measures to help get homes on the ground, but the most newsworthy announcement has caused concern among housing advocates.
While funding for infrastructure, incentives for planning reform, and the promise to help skilled migrants get access to work were all welcomed by residential building and planning insiders, the biggest ticket item of the 2026 budget has overshadowed some of those gains.
Will the 2026 budget help get new homes on the ground? Many of the measures that housing industry advocates pushed for have been met. Image: Getty
Changes to negative gearing and the capital gains tax (CGT) discount have been the biggest talking point out of the budget announcement on 12 May, but despite the fact that the government has made new homes exempt from these changes, industry advocates still warn that the news will hurt supply.
Here are the measures that have been welcomed by the industry, and the reason the new homes carve out from tax setting changes haven’t caused the relief one might assume.
Local infrastructure gets a big boost
A new, $2 billion Local Infrastructure Fund has been overwhelmingly supported by the residential construction sector.
The government is aiming to help states and territories get homes on the ground faster by dedicating funding to enabling infrastructure like roads, water and sewerage.
But there’s a catch. Funding from the Local Infrastructure Fund will be awarded with a preference to jurisdictions that pursue reforms to improve productivity in the housing sector – hastening approvals, land availability, and participation in the national construction code.
Once all the funding is allotted, it’s estimated the $2 billion tranche could support up to 65,000 homes over 10 years.
This adds to the $5.9 billion that still has to be allocated to states and territories as part of the 100,000 Homes for First Home Buyers program.
The Planning Institute of Australia (PIA) has celebrated the infrastructure funding, with PIA CEO Matt Collins noting that the fund “recognises that one of the biggest barriers to housing delivery is the infrastructure needed to support approved developments".
“Across Australia, thousands of homes already have planning approval but remain stalled because enabling infrastructure such as roads, water and sewerage has not yet been delivered,” Mr Collins said.
National standards now free to access
The government has decided to make access to the national building and construction standards free, funding the removal of the paywall so that all industry players can ensure they are compliant without a cost burden.
Widely welcomed by the Housing Industry Association (HIA) and others, the The National Electrical and Communications Association particularly called the paywall a "longstanding issue” and characterised this change as a “significant step forward for safety, compliance and productivity across the building and construction sector".
Support to hire skilled construction workers
The federal government has also dedicated funding to support the construction workforce, specifically by committing to faster skills assessments for migrant trades workers accelerating occupational licensing. The government will additionally introduce a new program of skills assessments for onshore visa holders, ensuring their existing qualifications and practical trade experience are recognised.
Master Builders has long called for support to allow more skilled construction workers either from overseas or with international qualifications to work in Australia, and CEO Denita Wawn noted that “workforce shortages remain one of the biggest constraints to delivering homes”.
She added that the budget “doesn’t go far enough” to address workforce issues.
The federal government intends to make it easier for skilled construction workers from overseas to have their credentials assessed and approved to work in Australia. Image: Getty
CGT and negative gearing changes explained
By the federal government’s own modelling, the CGT and negative gearing changes will result in 35,000 fewer homes being built over 10 years than would otherwise have been expected. This is due to an expected decrease in investor appetite for property assets in general.
Under the changes, negative gearing has been abolished on investment properties bought after budget night, while the 50% CGT discount for properties owned for more than one year has been slashed and will revert to a pre-1999 indexation model.
If the home purchased is a brand-new build, however, it will be exempt from these changes. Meaning that it can still be negatively geared, and investors will have the option of retaining the 50% CGT discount or adopting the inflation-based model on new build purchases.
Even while retaining tax settings that are favourable to investing in new builds, the government has drawn criticism from the building and planning industries for playing with policies that ultimately dampen property investment.
HIA managing director Jocelyn Martin said that in light of continued population and elevated housing demand, “the industry needs policy settings that align investment incentives with supply objectives, not work against them”.
Ms Martin said the positive gains for the construction sector were at risk of being offset by the tax changes, likening it to “right hand giving and left hand taking”.
“HIA remains concerned that changes to negative gearing and capital gains tax risk undermining housing supply, particularly rental housing, and offsetting the benefits of otherwise positive reforms.”
National president of the Urban Development Institute of Australia (UDIA), Oscar Stanley, said the organisation “supports the principle that tax settings should encourage additional homes".
He stressed that more was needed to drive an increase in housing supply in order to relieve pressure on prices.
“The only way to improve rents and housing affordability is to build more houses, not influence who gets the limited supply,” Mr Stanley said.
Ms Wawn of MBA said bluntly that "the budget has not delivered on the Federal Government’s commitment to materially increase new housing supply to its full potential”.
“The Government’s broken promises on CGT and Negative Gearing dilutes many of the positive features of tonight’s federal budget. The opportunity that exists to turbocharge housing supply has been lost,” she said.
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