Last updated: 12 May 2026
2026-27 Budget · First home buyers
What the 2026-27 Budget means for first home buyers
The 2026-27 Federal Budget is the most first-home-buyer-focused Australian budget in a generation. The Government's case is that tax settings have tilted housing demand toward investors for decades, and Statement 4 of Budget Paper No. 1 puts numbers to it: home ownership for 25-34 year-olds is down 7 percentage points since 2001 and median house prices have grown 407% since 1999 – more than twice as fast as wages.
Five things first home buyers need to know
Negative gearing is going new-build-only
From 1 July 2027, investors lose the right to deduct rental losses from established residential property against their wages. New builds still qualify, so investor money is steered toward fresh supply rather than bidding for existing homes.
The 50% CGT discount is being replaced
From 1 July 2027, the flat discount is replaced with cost base indexation plus a 30% minimum tax on real gains. Holding an investment property until retirement to drop into a low marginal rate stops being a tax strategy.
Foreign investor ban extended to 30 June 2029
The ban on foreign purchases of established dwellings is extended for another two years and three months, removing a chunk of competition for the same stock that first home buyers want.
A $2 billion Local Infrastructure Fund
Water, power, sewerage and roads to unlock up to 65,000 new homes over the decade – conditional on states speeding up approvals and simplifying the National Construction Code.
Tax cuts you'll see in your pay
A $1,000 instant deduction from 2026-27 (average benefit ~$205) and a $250 Working Australians Tax Offset from 2027-28 lifts the effective tax-free threshold to $19,985.
What the modelling actually says
Treasury's headline numbers from Box 4.4 of Budget Paper No. 1:
- 75,000 additional owner-occupiers over the decade – roughly reversing ten years of decline in the home ownership rate.
- Home ownership share rises by about 1 percentage point in the medium term.
- House price growth around 2% lower over a couple of years – not a fall, just slower growth.
- About $19,000 lower purchase price at the current national median, for buyers transacting in the window.
- Less than $2 per week increase in rents (vs $20+ per week added by the 2023-24 CRA increases).
- About 35,000 fewer dwelling completions over the decade due to lower price growth – more than offset by the 65,000 unlocked by the Local Infrastructure Fund.
What hasn't changed
The Budget does not touch the schemes that actually put first home buyers into houses today. The expanded 5% deposit First Home Guarantee, the First Home Super Saver Scheme, the Help to Buy shared-equity program, the state First Home Owner Grants, and state stamp duty concessions all continue. The main residence CGT exemption is untouched, and superannuation tax settings are not affected by the new package.
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Frequently asked questions
How will the 2026-27 Budget actually help first home buyers?
Treasury estimates 75,000 additional owner-occupiers will enter the market over the next decade as a direct result of the negative gearing and CGT changes. Modelling suggests house price growth will be around 2% lower over a couple of years, saving a buyer at the national median around $19,000.
Do I get a bigger grant or deposit boost in the new Budget?
There is no new federal First Home Owner Grant. Instead, the Budget extends the expanded First Home Guarantee (no income cap, unlimited places, 5% deposit, no LMI) and the Help to Buy shared-equity scheme. The big change for first home buyers is on the demand side – making investors a less aggressive force in the market.
When will I notice the difference?
The negative gearing and CGT changes start 1 July 2027. House price growth is modelled to slow over the following two years. Foreign-investor demand is already constrained by the extended ban on existing dwellings until 30 June 2029.
Should I wait until 2027 to buy?
Probably not. The modelled price effect is around 2% of slower growth over a couple of years – not a market crash. Holding off means another two years of rent, missed equity build-up, and exposure to interest-rate and rule changes. The FHBG, FHSS and state-based stamp duty concessions are stackable now.
Can I still use the FHSS and the First Home Guarantee together?
Yes. The FHSS (release of voluntary super for your deposit), the First Home Guarantee (5% deposit, no LMI), and state-based stamp duty concessions and grants all stack. Help to Buy is the only scheme that conflicts with the FHBG – you pick one.
Source: Budget Paper No. 1, Statements 1 and 4, Australian Treasury, 12 May 2026.
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.