This year’s 2026–27 federal budget, to be delivered by Treasurer Jim Chalmers tomorrow night, is shaping up to be one of the biggest in decades.
The Albanese government’s fifth budget will feature significant tax changes affecting property and share investors, electric vehicle buyers, and the beneficiaries of hundreds of thousands of discretionary trusts, ABC reported.
At the centre is a trio of reforms covering the capital gains tax (CGT) discount, negative gearing, and the taxation of discretionary trusts. The CGT discount is expected to be tied to the rate of inflation, with the government also considering a lower flat discount in the range of 25% to 35%.
Options for negative gearing reportedly include scrapping existing settings altogether or capping the number of properties that can be negatively geared, while changes to the treatment of discretionary trusts are also being prepared.
Any move that trims after‑tax returns is likely to influence investor borrowing capacity, portfolio strategy, and demand for established housing.
Prime Minister Anthony Albanese has framed the reforms as a response to intergenerational pressures in the housing market.
“For many young people, they feel like they haven't got a fair crack compared with my generation and the generations beforehand,” Albanese said.
Westpac Economics argues that broadening the tax base on housing while easing the burden on labour income could better align the tax mix with fairness objectives for younger cohorts – a shift that could gradually tilt demand towards first‑home buyers and owner‑occupiers.
Westpac’s budget preview suggests the broader fiscal backdrop remains constrained, with deficits expected to hover around 1% of GDP. That sets limits on how far the government can go with additional housing incentives without adding to inflation and mortgage rate pressures.
Alongside the tax package, the budget will target the supply side of the housing market with an additional $2 billion over four years for critical enabling infrastructure, supporting the construction of up to 65,000 new homes. Of this, $500 million is reserved for regional Australia, where land releases and new estates have often been delayed by funding gaps.
The Housing Industry Association (HIA) has welcomed the commitment, noting that the cost of enabling infrastructure often falls on new home buyers and can stall otherwise viable projects.
HIA managing director Jocelyn Martin said that “Timely provision of enabling infrastructure is critical to making projects shovel ready. It is not traditionally an Australian government responsibility, so this is an important commitment that will help accelerate housing delivery.”
A more predictable pipeline of titled lots and construction starts would support future opportunities for first‑home buyers, upgraders, and small developers as new stock comes to market.
Master Builders Australia has endorsed the new infrastructure funding, describing it as a positive step following the decision to make the Instant Asset Write Off permanent. However, chief executive Denita Wawn urged caution about the overall impact of the budget’s construction measures.
“These are positive announcements, however, we will need to see the full budget construction package to determine whether it will genuinely shift the dial and holistically increase housing supply,” Wawn said.
The organisation has highlighted persistent pressures on the sector, including a forecast shortfall of more than 200,000 homes against National Housing Accord targets, steep increases in detached house building costs, and the impact of regulation on new home prices. That combination continues to constrain stock and keep purchase prices elevated, even as higher mortgage rates and serviceability buffers weigh on demand.
Master Builders is calling for broader supply‑side reforms, including tax and depreciation settings, reduced red tape, and greater investment in the construction workforce.
Westpac’s economists similarly argue that these “nuts and bolts” reforms to cut red tape, accelerate approvals and harmonise occupational licensing can deliver strong productivity gains, supporting a more sustainable pipeline of new dwellings for first‑home buyers, upgraders, and property investors over the medium term.
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