Treasurer Jim Chalmers last night delivered the 2025-26 Budget, revealing a $27.6bn deficit for 2024-25, with deficits expected for the next four years.
The Budget focuses on cost-of-living relief. The government will further reduce income taxes over two years, lowering the tax rate on taxable income between $18,201 and $45,000 to 15 per cent from 1 July 2026, and further to 14 per cent from 1 July 2027.
The government will also provide $1.8 billion over two years from 2025–26 to continue energy bill rebates of $75 per quarter for eligible Australian households and small businesses until 31 December 2025.
So what are the key details the property industry should be across?
Housing
There are no new significant announcements related to housing in last night’s Budget, beyond the measures announced over the past week.
These relate to an expansion and refinement of the Help to Buy scheme and funding for prefab and modular housing. Further commitments on housing are expected to be announced during the election campaign.
Prefabricated and modular home construction
$49.3 million to support state and territory governments for prefabricated and modular home construction. States and territories will be offered funding to invest in local programs that grow the prefab and modular housing industry.
An additional $4.7 million investment to develop a voluntary national certification process for offsite construction to streamline approvals while ensuring high-quality standards are met.
The government has also committed $120 million from the National Productivity Fund to incentivise states to remove red tape preventing the uptake of modern methods of construction.
Help to Buy
$800 million dollars in additional funding to expand the Help to Buy scheme by broadening the eligibility criteria for this program.
Income caps will increase from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents.
Property price caps will also be increased and linked with the average house price in each state and territory, not dwelling price.
The government has now committed $120 million from the National Productivity Fund to incentivise states and territories to remove red tape preventing the uptake of modern methods of construction.
The government will invest $4.9 million over four years from 2025–26 to extend the Regional Home Guarantee and Family Home Guarantee under the Home Guarantee Scheme. Additionally, $8.9 million will be allocated over three years from 2025–26 to enhance support services for vulnerable Australians, including those facing housing insecurity and family, domestic, and sexual violence.
The government will increase the cap on the Commonwealth’s guarantee of Housing Australia’s liabilities from $10 billion to $26 billion including support for commitments for projects under the Housing Australia Future Fund and the National Housing Accord Facility.
Construction workforce
The government will invest in the pipeline of construction workers by doubling the current maximum incentive payments for eligible housing construction apprentices from $5,000 to $10,000 from 1 July 2025, supporting Australians through their training and boosting the construction workforce.
Migration and population
Net overseas migration (NOM) is declining from its peak in 2022–23 reflecting lower migrant arrivals.
NOM is forecast to ease further over the forward estimates. Arrivals are expected to continue to decline in 2024–25 before stabilising in 2025–26. Departures are expected to pick up from recent sustained lows as more people who arrived after the pandemic near the expiry of their visa.
Net overseas migration for 2025–26 is forecast at 260,000, a 22.4 per cent decline from 335,000 in 2024–25. In 2026–27, NOM is expected to stabilise at 225,000, remaining at that level through the forward estimates.
Energy performance
$489.4 million expansion of the Social Housing Energy Performance Initiative (SHEPI) to upgrade state social housing properties upgrades like rooftop solar, reverse cycle air-conditioning, LED lights, ceiling fans and electric hot water systems.
National Productivity Fund
Previously announced reforms under the $900 million National Productivity Fund to reward states and territories for agreed reforms that promote competition included reforms to streamline commercial planning and zoning, level the playing field for modern methods of construction, develop a broader right to repair, allow easier adoption of overseas standards and pave the way for a national worker screening check.
The government has now committed $120 million from the National Productivity Fund to incentivise states and territories to remove red tape preventing the uptake of modern methods of construction. The government has also flagged their next tranche of reforms will include:
- banning non-compete clauses for low- and middle-income workers
- working with states and territories, employers and unions through NCP to design a national licensing scheme for electrical occupations.
Corporate tax and international investment
Managed Investment Trusts
The government has announced its intention to amend the tax laws to clarify arrangements for managed investment trusts, complementing the Australian Taxation Office’s strengthened guidelines to prevent misuse.
As previously announced this measure will apply to fund payments from 13 March 2025. The start dates for the following measurers will be deferred:
- Extending the clean building managed investment trust withholding tax concession from 1 July 2025 to the first 1 January, 1 April, 1 July or 1 October after the Act receives Royal Assent
- Strengthening the foreign resident capital gains tax regime from 1 July 2025 to the later of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after the Act receives Royal Assent.
Restricting foreign ownership of housing
The government is making changes to foreign ownership of housing by:
- Banning foreign persons (including temporary residents and foreign owned companies) from purchasing established dwellings for two years from 1 April 2025, unless an exception applies. Exceptions to the ban will include investments that significantly increase housing supply or support the availability of housing on a commercial scale, and purchases by foreign owned companies to provide housing for workers in certain circumstances
- Providing the Australian Taxation Office (ATO) $5.7 million over four years from 2025–26 to enforce the ban
- Providing the ATO and Treasury $8.9 million over four years from 2025–26 and $1.9 million per year ongoing from 2029–30 to implement an audit program and enhance their compliance approach to target land banking by foreign investors.
Strengthening Tax Integrity
The government will provide $999 million over four years from 1 July 2025 to extend and expand tax compliance activities by the ATO. Additional funding includes:
- $717.8 million for a two-year expansion and a one-year extension of the Tax Avoidance Taskforce. This supports the tax compliance scrutiny on multinationals and other large taxpayers
- $155.5 million to extend and expand the Shadow Economy Compliance Program to reduce shadow economy that enables noncompliant businesses to undercut competition
- $75.7 million to extend and expand the Personal Income Tax Compliance Program
- $50 million over three years from 1 July 2026 to extend the Tax Integrity Program to ensure timely payments of tax and superannuation liabilities by businesses and wealthy groups.
Economy
Deficit: A Budget deficit of $27.6 billion is forecast in 2024-25.
Underlying cash balance: An underlying cash deficit of $42.1 billion (1.5 per cent of GDP) is forecast for 2025–26, $4.8 billion lower since Mid-Year Economic and Fiscal Outlook (MYEFO). The underlying cash deficit is expected to increase in 2026–27 before declining to $36.9 billion or 1.1 per cent of GDP) in 2028–29.
GDP growth: Real GDP is forecast to grow by 1.5 per cent in 2024–25, 2.25 per cent in 2025–26 and 2.5 per cent in 2026–27.
Tax share of GDP: Tax as a share of GDP over the medium term is broadly unchanged from the last Budget. The higher level of nominal GDP increases projected tax receipts.
Unemployment: The labour market has outperformed expectation with the unemployment rate near historic lows at 4.0 per cent in 2023-24, with
the participation rate remaining elevated at 66.8 per cent. The unemployment rate is projected to rise to 4.25 per cent in 2024–25 and remain there for the forecast period to 2028-29.Wage growth: Nominal wage growth has eased towards 3.0 per cent. The Wage Price Index (WPI) grew by 3.2 per cent through the year
to the December quarter 2024 and is expected to grow by 3.0 per cent through the year to the June quarter of 2025 and 3.25 per cent to June
2026Inflation: Inflation is expected to be 2.5 per cent in 2024-25, 0.25 per cent lower than forecast at the MYEFO.
Student Accommodation
In contrast to last year’s Budget, the 2025–26 Budget contains no specific policies on purpose-built student accommodation, student visa caps or specific forecasts related to student visas. The government is continuing to implement reforms in response to the Universities Accord, including establishing new university governance and funding mechanisms. The government is establishing the Australian Tertiary Education Commission, which will provide advice on higher education pricing matters, and tertiary sector harmonisation and sector performance.
Infrastructure and cities
The government will provide $17.1 billion over ten years from 2024–25 for road and rail infrastructure. Funding includes:
- $15.6 billion over ten years from 2024–25 for new Infrastructure Investment Program projects across Australia
- $1.5 billion over eight years from 2024–25 for existing Infrastructure Investment Program projects or corridors.
Across the states and territories, funding will go towards:
QLD
- $7.2 billion for upgrades to Queensland’s Bruce Highway
- $200 million for the Rockhampton Ring Road
NSW
- $1 billion for the South West Sydney Rail Extension
- $580 million for upgrades to Townson Road, Burdekin Road and Garfield Road West
- $500 million to upgrade Fifteenth Avenue
- $115 million to upgrade Terrigal Drive
- $50 million for Homebush Bay Drive
VIC
- $2 billion to upgrade Sunshine Station
- $1 billion for the Road Blitz
- $1.1 billion for the Western Freeway
SA
- $125 million for the Curtis Road Level Crossing Removal
WA
- $350 million to upgrade the Kwinana Freeway
TAS
- $200 million for upgrades to the Arthur Highway and $80 million for the Southern Outlet Transit Lane Extension
ACT
- $30 million for the Monaro Highway Upgrade
- $20 million for Monaro Highway Upgrade Stage 2 planning works
NT
- $200 million for the duplication of the Stuart Highway (Darwin to Katherine)