Budget 2025-26
A focus on cost-of-living relief but little new support to boost housing supply
The Australian Federal Government’s 2025–26 Budget is delivered against a backdrop of lower inflation, global uncertainty and early signs of monetary policy easing. Following a surplus in 2023–24, the Budget returns to deficit, with a projected shortfall of -$42.1 billion, and focuses on providing targeted cost-of-living relief.
Budget forecasts show wages continuing to grow, employment remaining strong, and net overseas migration gradually declining. However, global risks, including fragile international trade conditions and geopolitical tensions, continue to cloud the economic outlook. Inflation is expected to remain within the Reserve Bank’s 2–3% target band through to 2028–29, potentially allowing scope for further interest rate cuts.
Australia’s property market remains active, supported by recent rate cuts, a strong labour market, and robust population growth. However, new housing supply remains constrained, with dwelling approvals continuing to fall short of what’s needed.
While the Government has already committed over $33 billion to housing initiatives, this Budget adds new measures, including an $800 million expansion of the Help to Buy scheme and $54 million to accelerate modular and prefabricated construction. These are welcome steps aimed at improving access and affordability, though they are unlikely to ease short-term supply constraints.
The overall outlook for property markets remains largely unchanged. Despite positive new announcements, the immediate imbalance between housing demand and supply is expected to persist.
Budget at a glance
• Budget deficit of -$27.6b in 2024-25 and -$42.1b in 2025–26.
• Inflation forecast to remain within the 2–3% band through to 2028–29.
• Net overseas migration was 435,000 in 2023–24, falling to 260,000 in 2025–26.
• New tax cuts for all taxpayers.
• $150 energy bill relief for households and small businesses.
• $17.1b for additional infrastructure spending.
Property related budget measures
• $800m to expand Help to Buy by increasing property price and income caps.
• $1b for new crisis and transitional housing through the NHIF.
• $120m to encourage states to cut planning red tape.
• $70.9m boost to Indigenous Business Australia’s Home Loan Fund.
• $54m to accelerate modular and prefabricated housing.
• $8.9m for the ATO to crack down on land banking by foreign investors.
• Ban on foreign buyers purchasing established homes (2-year ban).
• New Housing Construction Apprenticeship Stream.
Inflation is expected to remain within the Reserve Bank’s 2–3% target band through to 2028–29, potentially allowing scope for further interest rate cuts.
Economic forecasts
Federal budget position
Source: The Commonwealth of Australia (budget.com.au/2025-26).
Residential property market impacts
Australia’s housing market remains active, with recent rate cuts, strong employment, and population growth driving buyer confidence through early 2025. Investors, first-home buyers and upgraders are all back in the market, encouraged by the prospect of lower interest rates over the coming years.
However, new housing supply continues to fall short. The Budget forecasts net overseas migration at 260,000 in 2025–26, keeping pressure on rental markets and pushing prices higher. Dwelling investment is set to rise by 6.5%, but construction starts remain well below the 240,000 homes a year needed to meet the national housing target.
To help address the shortfall, the Budget includes an $800 million expansion of the Help to Buy scheme, $1 billion for crisis and transitional housing, and $54 million to support modular and prefabricated construction. A further $120 million will incentivise states to fasttrack planning approvals and cut red tape.
Renters remain under pressure, but support continues through higher Commonwealth Rent Assistance, stronger rental protections, and build-to-rent tax incentives.
Despite these measures, short-term supply remains constrained by labour shortages, high building costs, and planning delays. As a result, prices are expected to remain under upward pressure through 2025–26.
Commercial property market impacts
Commercial property performance remains mixed, with results continuing to vary by sector and location.
Industrial is still the standout, underpinned by strong demand from logistics, ecommerce and manufacturing. Tight vacancies and continued infrastructure upgrades, such as the $7.2 billion Bruce Highway investment and intermodal projects, will further support industrial precincts and freight corridors.
Office markets remain under pressure, especially in CBDs, where flexible work trends continue to impact demand. However, a number of public infrastructure investment and initiatives may help lift white-collar employment and office occupancy in key locations.
Retail is expected to benefit from stronger household spending, boosted by new personal tax cuts from 2026. Small business incentives will also support demand, particularly in neighbourhood and largeformat retail centres.
Healthcare and aged care assets stand to gain from increased funding across the sector. This includes $8.5 billion for Medicare and $2.6 billion to lift aged-care wages, further strengthening demand from healthcare tenants and operators.
While there are no direct measures for commercial property, the broader economic support in this Budget, particularly tax cuts, infrastructure investment and health funding, will support tenant demand and investor confidence heading into 2026.
New housing related measures
Help to Buy Expansion
• $800 million to expand Help to Buy by increasing property price and income eligibility caps.
• Expected to assist up to 40,000 first-home buyers to purchase a home sooner with a lower deposit.
Modular and Prefabricated Housing
• $54 million to accelerate offsite construction and reduce build times.
o $49.3 million for state and territory programs to promote modular and prefabricated housing.
o $4.7 million to develop a national certification framework to streamline approval processes.
State Housing Reform
$120 million from the National Productivity Fund to encourage states to cut planning red tape and remove regulatory barriers to faster home construction.ction.
Construction Apprenticeships Stream
• A new targeted stream launching 1 July 2025 to address skills shortages in the building sector.
• Includes direct payments of up to $10,000 to apprentices and up to $5,000 in hiring incentives for employers.
Foreign Investment Restrictions
Two-year ban on foreign investors purchasing existing homes, starting 1 April 2025.
• $5.7 million for ATO enforcement and $8.9 million to target land banking by foreign buyers.
Crisis and Transitional Accommodation
• $1 billion additional funding through the National Housing Infrastructure Facility.
• Focused on delivering more emergency housing for women, children, and young people at risk of homelessness.
Previously announced housing measures
Housing Australia Future Fund (HAFF)
• $10 billion fund delivering around 30,000 social and affordable homes over five years.
• Initial funding rounds commenced in 2024.
National Housing Accord
• Agreement between federal, state, and local governments to build 1.2 million new homes by 2029.
Housing Support Program (HSP)
• $1.5 billion to support states and territories with planning reform, enabling infrastructure, and delivery of social housing.
• Includes $500 million for community infrastructure.
New Homes Bonus Payments
• Up to $3 billion in bonus payments to incentivise states to deliver housing faster.
• Combined with the HSP, a total of $4.5 billion to tackle infrastructure bottlenecks.
Build-to-Rent Tax Incentives
• Ongoing tax concessions expected to support delivery of up to 80,000 new rental homes, including 8,000 affordable dwellings.
Social Housing and Homelessness Funding
• $9.3 billion committed under the National Agreement on Social Housing and Homelessness.
• Includes $400 million per year for homelessness services.
HomeBuilder Program
• Deadline for documentation extended to 30 June 2025.
• $176 million in remaining funding to support ongoing builds.
Remote Indigenous Housing
• $968.3 million over five years for housing in remote Northern Territory communities.
• Additional $100 million from HAFF for remote Indigenous housing across Australia.
Ongoing tax concessions expected to support delivery of up to 80,000 new rental homes, including 8,000 affordable dwellings.
Direct payments of up to $10,000 to apprentices and up to $5,000 in hiring incentives for employers.
Other budget measures
Tax Cuts
• Two-stage income tax cut starts 1 July 2026:
o 16% bracket (incomes $18,201–$45,000) reduced to 15%.
o Drops further to 14% from 1 July 2027.
• Average taxpayer to save $536 per year by 2027–28.
Energy bill relief
• $150 in bill rebates for households and small businesses (two $75 payments through to December 2025).
• Total additional investment: $1.8 billion.
Student debt
• 20% reduction in outstanding HELP debts from 1 June 2025, removing $16 billion in total.
• HELP repayment threshold lifted from $54,435 to $67,000.
Wages
• Ban on non-compete clauses for low- and middle-income workers.
$2.6 billion for aged-care wage increases from March 2025.
• $3.6 billion for early childhood education wages: 10% increase from Dec 2024 and 5% more in Dec 2025.
Medicare
• $7.9 billion to expand bulk billing; targeting 9 in 10 GP visits by 2030.
• 50 additional Medicare Urgent Care Clinics (total 137).
• $1.8 billion for public hospitals and 2,000 new GP training places annually by 2028.
Infrastructure
The 2025–26 Budget allocates $17.1 billion in additional infrastructure funding, adding to the existing national pipeline. The projects aim to improve transport networks, support housing delivery, enhance freight movement and create jobs across metro and regional areas.
Well-planned infrastructure is essential for growing communities, helping reduce travel times, improve access to services and support new housing in outer suburbs. These investments also play a broader economic role by boosting productivity, supporting local industries and improving connectivity across key freight and logistics corridors.
New South Wales
$1b for South West Sydney Rail Extension corridor preservation
• $580m for upgrades to key Western Sydney roads
• $500m for Fifteenth Avenue upgrade in Western Sydney
• $150m for Newcastle Inner City Bypass
• $115m for Terrigal Drive upgrade
• $60m for Nowra Bypass
• $50m for Homebush Bay Drive upgrades
$20m for Dubbo freight rail upgrades
National and Multi-State Projects
• $489.9m for Princes Highway upgrades (New South Wales, Victoria, South Australia)
• $300m for Western Sydney Roads Package (supporting airport and freight)
• $120m for regional hospital upgrades (New South Wales and Victoria)
• $49.6m for national transport safety and maritime skills
$821.1m for the national Roads to Recovery program (2025–26)
• $310m for the Safer Local Roads and Infrastructure Program
• $183m for the Western Sydney Infrastructure Plan
Victoria
• $2b for Sunshine Station upgrade
$1.1b for Western Freeway upgrades
• $1b for Victorian Road Blitz
• $135m for intermodal terminal development
• $100m for Geelong–Ballarat rail improvements
• $50m for Shepparton Bypass
• $40m for terminal planning at Beveridge Queensland
• $7.2b for Bruce Highway safety upgrades
• $200m for Rockhampton Ring Road
• $150m for Mackay Port Access Road
• $40m for Cairns Marine Precinct
$35m for Gold Coast Light Rail upgrades
Western Australia
• $350m for Kwinana Freeway upgrades
• $80m or Pilbara freight connections
• $10m for common user port facilities at Dampier and Lumsden Point
South Australia
• $145m for Augusta Highway duplication (Stage 2)
• $125m for Curtis Road level crossing removal
• $30m for Adelaide Hills road upgrades
• $20m for Whyalla Airport runway
• $10m for Port Augusta freight logistics
• Refurbishment of Port Augusta Wharf (part of $90m national port package)
Tasmania
• $200m for Arthur Highway upgrades
• $110m for Tasman Highway duplication
• $90m for Brooker Highway upgrades
$80m for Southern Outlet Transit Lane
• $20m for Hobart Airport upgrades
• $10m for Burnie rail and port infrastructure
• Macquarie Wharf 6 upgrades (Hobart)
Northern Territory
$250m for major Stuart Highway upgrades
• $200m for Stuart Highway duplication (Darwin to Katherine)
Australian Capital Territory
• $30m for Monaro Highway upgrades
• $20m for Monaro Highway Stage 2 planning
