Budget doubles down on housing supply with $2bn infrastructure push

Treasurer Jim Chalmers unveiled a new $2 billion Local Infrastructure Fund aimed at accelerating housing delivery and easing development delays.

The fund will support local governments and state utilities providers in delivering essential "last mile" infrastructure, including water, power, sewerage and road connections needed to unlock new housing developments.

Chalmers said the initiative could support up to 65,000 homes over the next decade and brings the governments total investment in housing enabling infrastructure to $6.3 billion since taking office.

Access to funding will be tied to state and territory commitments to further planning and productivity reforms, including faster approvals processes, greater land availability and simplification of the National Construction Code. Treasury estimates such changes could generate regulatory savings of up to $3 billion annually if compliance costs are reduced by 10%.

The announcement builds on a broader housing agenda that has increasingly focused on unlocking institutional capital boosting long term housing supply amid worsening affordability pressures.

"[The government] is taking decisive action in the Budget to boost housing supply, make our tax system fairer to help more Australians into homeownership and build on our work over the last four years to build more houses," Chalmers said.

The government is also set to limit negative gearing for residential property to new builds from 1 July 2027.

The changes will be prospective, with gains accrued before the start date retaining the current 50% discount. The new system will apply to all assets except new housing, where investors can choose between the old and new arrangements.

The government estimates the reforms will help around 75,000 households enter the housing market over the next decade. They form part of a broader Budget package aimed at boosting housing supply and affordability.

The measures support first home buyers, alongside the expanded 5% Deposit Scheme and Help to Buy.

"Together, these initiatives now assist more than half of first home buyers into home ownership," Chalmers said.

A major early initiative was the National Housing Accord unveiled in the 2022 Federal Budget, which aimed to deliver one million new homes over five years from 2024. The Accord brought together governments, superannuation funds and the construction sector, with the Commonwealth committing an initial $350 million to support 10,000 affordable homes, matched by state and territory commitments.

Several large superannuation funds subsequently flagged support for greater investment in residential housing, arguing institutional scale housing developments could deliver both long term returns and broader economic benefits.

The Housing Australia Future Fund (HAFF) later became the centrepiece of the government's affordable housing strategy. Established with a $10 billion capital base, the fund aims to support delivery of 40,000 social and affordable homes over five years.

However, the HAFF also faced growing scrutiny with the Australian National Audit Office launching a performance audit in 2025 amid concerns around project delivery, costs and times. Industry groups have welcomed greater oversight but warned further delays could undermine efforts to increase housing supply at scale.