The 2026 Federal Budget has elicited cautious and critical responses from Australia’s peak property bodies.
As the industry navigates a fragmented approvals system and high costs, leaders are weighing the introduction of new infrastructure funding against the impacts of changes to capital gains tax (CGT) and negative gearing.
Master Builders Australia highlighted that the budget has not delivered on the Federal Government's commitment to materially increase new housing supply to its full potential. Treasury's own estimates show that new restrictions on negative gearing and CGT will cost Australia 35,000 new homes over the next decade.
Master Builders Australia CEO Denita Wawn said, "The Government’s broken promises on CGT and Negative Gearing dilutes many of the positive features of tonight's federal budget."
Wawn noted that the opportunity to turbocharge housing supply has been lost, while pointing out that building a new detached house is 48.6 per cent more expensive than before the pandemic.
Emphasising that more progress is needed, Wawn added:
"Workforce shortages remain one of the biggest constraints to delivering homes."
Urbis welcomed the $2 billion housing infrastructure investment aimed at unlocking 65,000 homes over 10 years, though it warned the pipeline will remain stuck if approvals, infrastructure, build costs, and financing do not move together.
"This is welcome movement for a system that’s stuck and it’s good to see funding targeted at unlocking feasible, more affordable homes," said Urbis partner and housing sector lead Mark Dawson.
Urbis chief economist Richard Gibbs pointed out that it is not a systemic change and that affordability and feasibility must be balanced when delivering supply.
"The biggest issue right now is making the feasibility stack up," Gibbs said.
Regarding the proposed changes to CGT and negative gearing, Urbis suggested the shift aims to assist first homebuyers.
Urbis partner and board member Hamish McKnight, said "This represents a genuine shift in tax policy, something that has been notably absent in Australia for some time."
The Property Council of Australia warned that the budget's tax changes are a tightrope walk for an industry battling high costs of labour, materials, and borrowing.
While acknowledging the government listened to advocacy and carved out new housing supply investment from the tax hikes in the short term, Property Council chief executive Mike Zorbas warned that negative gearing and CGT changes will alter investor behaviour.
"The jury is well and truly out on whether the person funding a new home today will proceed with the investment when it becomes a more highly taxed ‘existing’ home at the point of future sale," Zorbas said.
He also called for all parties to commit to unlocking supply before discussing tax or migration changes, adding, "We need lower taxes on new homes and commercial property, a culture of 'yes' around new projects and bigger, faster unlocking of last-mile infrastructure."
Offering an assessment of the underlying market mechanics, Marshall White director Leonard Teplin warned that taxing investors will ultimately constrain supply, while pointing to labour shortages as a bottleneck.
"Disincentivising property investment reduces housing supply and makes the remaining property more expensive," Teplin said.
"If we build fewer homes and reduce incentives to invest in rental property, housing prices will only continue to increase.
"The government confirmed that rents will go up and they believe values may come down with less investors in the market - I disagree - I don’t think investors will sell.
"What Australia really needs is more construction workers to build more homes faster - but that doesn’t seem to align with what the Labor Party’s biggest supporters want."
