The Federal Government’s latest housing reforms are designed to help more Australians enter the property market sooner, with expanded support for first home buyers and stronger incentives for newly built homes.*
The 2026–27 Federal Budget has introduced some of the biggest housing and property tax reforms Australia has seen in decades, with a strong focus on increasing housing supply and improving access to home ownership for future buyers. Many of the changes are aimed at making it easier for Australians to purchase or build a new home, particularly within growing new communities across Victoria.
For first home buyers, the reforms signal a clear shift toward supporting newly built homes over established properties. At Homebuyers Centre Victoria, we understand that navigating government schemes, finance, deposits and land availability can feel overwhelming. That’s why we’ve broken down the key housing announcements in simple terms, including what they could mean if you’re planning to build your first home.
A stronger focus on new builds
The headline housing announcement from the Budget is the proposed reform to negative gearing and Capital Gains Tax (CGT).
From 1 July 2027, investors purchasing established residential properties after budget night may no longer be able to offset rental losses against their salary or wages income in the same way they can today.
Importantly, most newly built homes are expected to remain exempt from those restrictions.
That means investors purchasing qualifying new homes would still retain access to existing negative gearing arrangements, while established homes purchased after the cut-off date would move into a more limited framework.
For first home buyers, this matters because government policy is now increasingly aligned toward encouraging new housing supply.
In simple terms, the Federal Government is encouraging more investment into newly built homes and future housing supply.
What is negative gearing?
Negative gearing is a tax arrangement that allows property investors to deduct rental property losses from their taxable income.
For decades, it has been one of the key financial incentives supporting investment into Australian property.
Under the proposed reforms, investors purchasing established homes after budget night would still be able to carry forward losses or offset them against rental income from other properties, however they would no longer be able to reduce their personal income tax using those losses.
Importantly, qualifying newly built homes are expected to remain eligible under existing negative gearing arrangements.
In practical terms, this means new builds may become one of the primary pathways for investors seeking to retain the current tax advantages associated with negative gearing.
The Government says the reforms are intended to encourage more investment into new housing supply while improving opportunities for owner occupiers over time.
While the long-term market response will take time to unfold, the broader policy direction is becoming increasingly clear: greater support for new housing delivery across Australia.
Capital Gains Tax changes explained
The Budget also proposes major changes to Capital Gains Tax concessions from 1 July 2027.
Currently, investors who hold assets for more than 12 months generally receive a 50% CGT discount when they sell.
Under the proposed reforms, that discount would move to an inflation indexation model alongside a minimum 30% tax rate on gains.
The Government says the changes are intended to better reflect “real” gains above inflation while reducing tax advantages that have historically favoured high-income investors.
Importantly for owner occupiers, the main residence exemption remains unchanged.
These reforms are aimed at investment properties, rather than owner-occupiers or families looking to build or buy a home to live in.
The Government has also proposed additional flexibility for qualifying new builds, again reinforcing the broader push toward supporting new housing supply.
What this could mean for the Victorian market
No one can predict exactly how the market will respond over the next several years, but many economists expect the reforms to influence investor behaviour and broader housing trends.
Some forecasts suggest investor demand for established homes may soften, while interest in new builds and housing supply could strengthen instead.
• Greater focus on house and land packages
• Increased development activity in growth areas
• More new communities entering the market
• Continued government support for housing supply initiatives
Victoria’s outer growth corridors and regional centres are already seeing ongoing investment in infrastructure, schools, transport and community amenities, making them increasingly attractive for buyers looking for value and lifestyle opportunities.
Faster approvals and reduced red tape
The reforms also focus on streamlining the development and construction process. Access to infrastructure funding will be linked to state-based reforms aimed at:
• Faster planning approvals
• Simpler development pathways
• Improved land availability
• A nationally consistent construction code
These changes are designed to reduce delays, improve productivity and accelerate housing delivery across Australia.
More tradies to support residential construction growth
Workforce shortages remain a major challenge across residential construction. To help address this, the Government is investing $85.2 million to accelerate skills assessments for qualified migrant tradespeople and improve pathways for skilled workers to enter the construction workforce faster.
This builds on existing initiatives including:
• Free TAFE programs
• The $10,000 apprentice incentive for residential construction training
Together, these measures aim to strengthen workforce capacity and support the industry’s ability to meet growing housing demand.
Additional tax relief for workers
The Budget also included several broader cost-of-living measures that may benefit households more generally.
One of the key announcements was a new instant tax deduction of up to $1,000 for eligible work-related expenses from the 2026–27 financial year.
The Medicare levy low-income threshold is also expected to increase by 2.9%, providing additional tax relief for eligible households.
While these measures won’t transform borrowing power on their own, every improvement to household finances can help when buyers are considering deposits, lending capacity, and ongoing living costs.
Combined with existing Victorian support initiatives such as the First Home Owner Grant and eligible stamp duty concessions, the broader picture remains supportive for many first home buyers looking to enter the market.
New build categories: investor tax benefit eligibility
The proposed reforms place greater focus on new housing supply, with qualifying new builds expected to retain access to existing investor tax benefits.
The table below outlines how different new build categories may be treated under the proposed changes.
| New build category | Home owner impact | Investor impact |
|---|---|---|
| Greenfield build | No impact | ✓ Eligible for tax benefits |
| Turnkey townhouse (new build) | No impact | ✓ Eligible for tax benefits |
| Knockdown rebuild (replace 1 home with 2+ homes) | No impact | ✓ Eligible for tax benefits |
| Knockdown rebuild (replace 1 home with another) | No impact | ✗ Not eligible for tax benefits |
| Substantial renovation | No impact | ✗ Not eligible for tax benefits |
| Note: A knockdown rebuild that replaces one home with two or more new homes may qualify as a new build because it adds to housing supply. A knockdown rebuild replacing one home with one home does not qualify. Homebuyers Centre Victoria does not offer knockdown rebuilds, however eligible buyers may be able to explore this pathway through other ABN Group businesses. Turnkey townhouses offered as new, complete dwellings qualify as new builds and retain access to investor tax benefits. | ||
The new changes will be implemented from 1 July 2027. For more information on eligibility, please refer to the Government website.
Key dates to know
Several of the proposed Federal Budget housing and tax reforms are expected to roll out progressively over the coming years.
Here are some of the key dates currently outlined as part of the 2026–27 Federal Budget announcements.
| Date | Announcement |
|---|---|
| 12 May 2026 | Federal Budget handed down; grandfathering cut-off date introduced (7:30pm AEST) |
| 1 July 2026 | New $1,000 instant tax deduction for work-related expenses begins |
| 1 July 2027 | Proposed negative gearing and CGT reforms commence |
| 1 July 2028 | Proposed discretionary trust tax changes commence |
| Note: Budget measures are subject to parliamentary passage and may change. The information provided is general in nature and based on announcements made as part of the 2026–27 Federal Budget. | |
Building with Homebuyers Centre
At Homebuyers Centre, we work with first home buyers, so we understand that entering the property market can feel like a big step. Budget announcements, interest rates, grants, land releases and finance conversations can quickly become overwhelming — especially when you’re navigating the process for the first time.
That’s why our focus has always been on helping buyers feel supported from the very beginning. Our fixed-price contracts are designed to provide greater certainty around costs, while our team and finance partner, Resolve Finance, can help guide you through:
• Available grants and concessions
• Finance pathways and deposit options
• House and land opportunities
• Turnkey townhouse options
• Home designs suited to your lifestyle and budget
• What to expect throughout the building journey
We also understand the Victorian market specifically, including where growth areas are emerging and how first home buyers are approaching affordability in today’s environment.
The Federal Budget may continue shaping the housing market over the coming years, but one thing remains consistent: demand for quality new homes and connected communities across Victoria continues to grow.
For many buyers, building new offers the opportunity to secure a home designed for modern living, with contemporary layouts, energy efficiency, new inclusions and the confidence that comes with a brand-new build.
Speak to a consultant
Speak to a New Homes Consultant to explore your options and connect with our trusted finance partner, Resolve Finance.
Whether you’re ready to start building or simply exploring your options, we can help you understand what may be possible based on your budget, lifestyle, and goals.
Information on this page does not consider your personal needs and financial circumstances and you should consider whether it is appropriate for you. This article is general in nature and based on the 2026-27 Federal Budget announcements made on 12 May 2026. Budget measures are subject to parliamentary passage and may change. Please note this is a guide only, this information may be subject to change. All Financial services provided by Resolve Financial Solutions Pty Ltd trading as Resolve Finance ABN: 65 079 545 378 Australian Credit Licence No. 385487. The building practitioner is ABN Group (Vic) Pty Ltd. Trading as Homebuyers Centre. CDB-U 49215. Finance options are available through Resolve Finance Solutions PTY LTD trading as Resolve Finance ABN 65 079 545 378 (Australian Credit License 385487).
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