Federal Budget 2026–27: What it means for buyers building new in Victoria
For buyers planning their next move, whether upgrading, downsizing, investing, or building for the first time - the latest Federal Budget announcements may help unlock greater certainty and long-term value across Melbourne and regional Victoria.
The Federal Government’s housing reforms place a strong emphasis on increasing housing supply and supporting new home delivery, with targeted incentives that continue to favour newly built properties.* For many Australians, this signals a sustained shift toward building new, particularly within Victoria’s established and emerging communities.
A renewed focus on new housing supply
The 2026–27 Federal Budget introduces some of the most significant housing and property tax reforms seen in decades. At the centre of these changes is a clear policy direction: encouraging investment into new housing delivery while improving long-term access to home ownership.
For buyers considering a new build, whether as a primary residence or part of a broader property strategy, this focus reinforces the role new homes will play in addressing supply constraints, supporting affordability and shaping future housing demand across Australia.
Why new builds matter more than ever
One of the headline announcements 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 personal income. Importantly, qualifying newly built homes are expected to remain exempt from these restrictions.
This distinction signals a clear preference for new housing supply, encouraging investment into homes that increase overall stock rather than competing with owner-occupiers for existing properties.
For buyers building a home to live in, this broader policy shift may help ease competition in the established market over time, while supporting the continued delivery of new, well-planned communities.
One of the headline announcements 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 personal income. Importantly, qualifying newly built homes are expected to remain exempt from these restrictions.
This distinction signals a clear preference for new housing supply, encouraging investment into homes that increase overall stock rather than competing with owner-occupiers for existing properties. For buyers building a home to live in, this broader policy shift may help ease competition in the established market over time, while supporting the continued delivery of new, well-planned communities.
Understanding negative gearing
Negative gearing allows property investors to deduct rental losses from their taxable income and has long been a key incentive supporting investment in 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.
Qualifying newly built homes are expected to retain access to existing negative gearing arrangements, reinforcing new builds as a preferred pathway for investors and supporting future housing supply.
Capital Gains Tax changes explained
The Budget also proposes changes to Capital Gains Tax concessions from 1 July 2027.
Currently, assets held for more than 12 months generally receive a 50% CGT discount upon sale. Under the proposed reforms, this would shift to an inflation-indexed model alongside a minimum 30% tax rate on gains.
The Government has stated these changes are intended to better reflect real gains above inflation and reduce tax advantages that have historically favoured high-income investors.
For owner-occupiers, the main residence exemption remains unchanged. These reforms are targeted at investment properties rather than homes built or purchased to live in.
What this could mean for the Victorian market.
While the long-term market response will take time to unfold, many economists expect the reforms to influence investor behaviour and broader housing trends.
Potential outcomes may include:
- Greater focus on house and land opportunities
- 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 continue to benefit from investment in infrastructure, transport, education and community amenities, making them increasingly attractive for buyers seeking space, lifestyle and long-term value.
Faster approvals and simpler pathways to build
The Budget also targets planning reform and construction efficiency. Access to infrastructure funding will be linked to state-based reforms focused on:
- Faster planning approvals
- Simpler development pathways
- Improved land availability
- A nationally consistent construction code
These measures are designed to reduce delays, improve productivity and accelerate housing delivery, supporting buyers who are ready to build sooner.
Supporting the construction workforce
To address ongoing labour shortages, the Government is investing $85.2 million to accelerate skills assessments for qualified migrant tradespeople and improve pathways into the construction workforce.
This builds on existing initiatives, including:
- Free TAFE programs
- A $10,000 apprentice incentive for residential construction
Together, these measures aim to strengthen workforce capacity and support the delivery of new homes across Australia.
Dual Occupancy builds: a strategic response to housing supply reforms
The Federal Budget’s continued emphasis on increasing housing supply also reinforces the growing role of dual occupancy developments in Victoria’s housing landscape.
Dual occupancy builds, where two dwellings are delivered on a single title or subdivided lot, directly support the Government’s objective to increase housing density in established and growth areas. As a result, they are increasingly aligned with policy settings designed to accelerate new housing delivery and improve overall market supply.
With planning reforms, faster approvals and infrastructure funding tied to increased housing delivery, dual occupancy projects are well positioned to benefit from streamlined development pathways over time.
For buyers considering a more strategic build approach, dual occupancy homes offer a way to maximise land value while contributing to future housing supply, a priority clearly reinforced in the 2026–27 Federal Budget.
For buyers and investors, this creates several potential advantages:
- Improved land efficiency, particularly in well-located suburbs and growth corridors
- Multiple income streams, where one dwelling may be owner-occupied and the other leased
- Greater flexibility, supporting multigenerational living, downsizing strategies or long-term investment planning
- Stronger alignment with new build incentives, including ongoing access to investor tax benefits for qualifying new dwellings
Additional tax relief for households
The Budget also includes broader cost-of-living measures that may benefit households more generally, including:
- A new instant tax deduction of up to $1,000 for eligible work-related expenses
- A 2.9% increase to the Medicare levy low-income threshold
While these measures won’t significantly change borrowing power on their own, they may help improve household cash flow, supporting deposits, lending capacity and ongoing living costs.
Combined with existing Victorian initiatives such as the First Home Owner Grant and eligible stamp duty concessions, the outlook remains supportive for many buyers planning to build new.
Building with Boutique Homes
At Boutique Homes, we understand that building a home is a considered decision, shaped by lifestyle, design expectations and long-term goals.
Our focus is on creating architecturally inspired homes that balance refined design with quality craftsmanship and modern liveability. From selecting the right home design to understanding grants, finance options and land opportunities, our experienced team is here to guide you through every stage of the journey.
We understand the Victorian market, from established suburbs to emerging communities, and how buyers are approaching value, flexibility and design in today’s environment.
While policy settings may continue to evolve, demand for thoughtfully designed new homes and connected communities across Victoria remains strong. For many buyers, building new offers the opportunity to create a home tailored to the way they live, with contemporary layouts, energy efficiency and the confidence that comes with a brand-new build.
Speak with a New Homes Consultant
Whether you’re planning your next home, exploring an investment opportunity, or simply weighing up your options, our New Homes Consultants 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 Boutique Homes. 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).