Aidan Devine
Updated 12 May 2026, 7:40pm
First published 12 May 2026, 7:37pm
The Budget with provide extra funding to support infrastructure for new housing. Picture: Getty Images
Reforms to negative gearing and capital gains tax dominated much of this year’s Budget but there were also an array of other housing policy measures.
Treasurer Jim Chalmers announced funding to support new housing projects, while extending bans on foreign ownership of established properties.
Australia’s housing supply will be supported in the Budget with another $2 billion investment in the power, roads and drains needed to support new housing developments
Budget Papers estimated this funding would help build another 65,000 new homes over the next decade.
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The $2 billion investment takes the total funding for new housing project support to over $6.3 billion, Budget papers claimed.
A lack of supporting infrastructure has been a key roadblock to building new homes in outer city areas.
The Local Infrastructure Fund will be available in states and territories that commit to speeding up housing approvals.
Treasurer Jim Chalmers said in his Budget speech that housing shortages needed to be addressed because they were making property “unaffordable”.
“This challenge hits young workers and families hard,” he said.
Also included in the budget was an extension of bans on foreign ownership of established homes. The ban was set to expire in 2027 and was extended to 2029.
Foreign investors can still buy new homes, which Budget papers claimed will be “incentives to invest in additional housing supply”.
Nearly $60 million was set aside to support providers of secure housing for 4,000 young people at risk of homelessness over the next four years.
Government announced no new changes in Commonwealth Rent Assistance payments.
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Treasurer Jim Chalmers conceded that housing shortages had made it harder for first-home buyers. Picture: Hilary Wardhaugh
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Included in the Budget papers was a reference to the government’s delivery of back-to-back increases in Commonwealth Rent Assistance, but these increases were made in 2022/23 and 2023/24.
The lack of changes to Budget rent assistance came despite landmark negative gearing and capital gains tax reforms, which Budget papers estimated would add $2 to weekly rents.
Critics had argued before the release of the Budget papers that these reforms could discourage new rental supply and drive rent increases far steeper than the figure reported by government.
Modelling from property analytics group SQM Research had estimated rents would rise by up to 20 per cent in Sydney and Melbourne because of the twin tax reforms.
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Under the tax reforms, landlords who currently own properties will be able to continue to offset losses on their investment against their tax, otherwise known as negative gearing, but new investors will only get the benefit on newly built homes from July next year.
The current capital gains tax discount available for investors selling homes owned for over a year will also be replaced by an indexation system.
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