Budget night is 12 May. By the time Jim Chalmers sits down after his speech, Australian builders, developers and tradespeople will have a clearer picture of what the next few years could look like.
Right now, the picture is a mix of confirmed policy already in motion, significant measures rumoured or confirmed to be in progress, and genuine uncertainty about decisions that have still not been locked in.
This article is a practical briefing. Not political commentary. What is being proposed, what is confirmed, and what each measure means for the construction industry.
The Big One: CGT and Negative Gearing Reform
This is the issue dominating pre-budget coverage, and it deserves careful attention rather than panic.
For years, the Albanese government maintained that changes to negative gearing and the capital gains tax discount were off the table. In February 2026, Treasurer Jim Chalmers confirmed that Treasury is modelling changes to both. Neither the Prime Minister nor the Treasurer has ruled them out.
Here is what is reportedly on the table.
On the capital gains tax discount: Treasury is modelling a reduction from the current 50 per cent to 33 per cent, or a return to the pre-1999 indexation model, for assets held longer than 12 months. Some reporting suggests the change could apply to all asset classes, not just residential property. More recent analysis from Commonwealth Bank economists suggests the government may go further than originally expected.
On negative gearing: two models are circulating. The first is a two-property cap, which would quarantine rental losses on a third or subsequent property so they can only be offset against future rental income, not against wages or salary. The second, more sweeping option is to restrict negative gearing deductions to newly built properties only, redirecting investment incentives toward new supply rather than established housing.
Grandfathering is expected in some form for both measures, meaning investors who have already purchased properties are likely to keep existing treatment. Assets acquired after budget night would face the new rules.
Nothing is confirmed until 12 May.
Why This Matters for Builders
If you build new homes, the intent of the proposed reforms could theoretically work in your favour. Restricting negative gearing to new properties would, in theory, push investor demand toward construction rather than established housing. That is one reading of the policy.
The industry reading is different.
The Housing Industry Association has commissioned independent economic modelling by Qaive and Tulipwood Economics examining a range of scenarios. The findings are direct.
Removing negative gearing with minimal grandfathering would result in 45,500 fewer dwelling starts over the five years to 2029-30, a fall of more than 4,250 construction jobs per year, and a GDP reduction of $3.1 billion in net present value terms. Removing the CGT discount under similar conditions would reduce housing supply by around 33,000 dwellings, cost more than 3,000 construction jobs, and reduce GDP by $3 billion. Combined, the effects compound.
HIA Managing Director Jocelyn Martin has been direct about the industry’s position: reducing investor incentives at a time when the market is already struggling to reach the government’s own 1.2 million homes target points policy in the wrong direction.
The counterargument comes from institutions like the Grattan Institute, which projects more modest impacts of one to two per cent on property prices nationally, with limited rental market disruption. The Senate Economics References Committee inquiry in March 2026 recommended cutting the discount, arguing it distorts investment toward existing housing at the expense of first homebuyers.
Both bodies have credible analysis behind their positions. Builders should form their own view based on their specific market and project pipeline, not media noise.
The practical question for builders in multi-residential and investor-grade construction is simpler: if the after-tax return on holding investment property deteriorates, does investor appetite for new builds hold up, or does development finance become harder to secure and pre-sales more difficult to achieve?
That question will not be answered until the budget lands and the market has time to respond.
The $10 Billion First Home Buyer Pipeline
On the demand side, the government has committed $10 billion to build up to 100,000 homes sold exclusively to first home buyers. Construction on the first projects is expected to begin in 2026-27.
This is a supply-side intervention, not a demand subsidy. The government co-invests alongside state and territory governments using a mix of grants and zero-interest loans, with homes targeted below market value.
For builders and developers with capacity for government-partnered work, this is a pipeline worth watching. The scale of delivery will depend on planning approvals, land supply, and construction capacity across each state. None of those variables are without friction.
Help to Buy Expansion
The Help to Buy shared equity scheme is expected to receive an $800 million boost, lifting property price caps to align with average prices in each state and territory, and raising income thresholds from $90,000 to $100,000 for singles and from $120,000 to $160,000 for couples and single parents.
Under the scheme, the government co-purchases up to 40 per cent of a home, reducing the deposit and mortgage required. For builders, a broader pool of eligible buyers means a broader market for new construction, particularly at the entry-level end of the residential market.
This is already in motion. The $800 million expansion is expected to be confirmed on budget night.
The Modular and Prefab Funding Stream
The 2025-26 budget allocated $49.3 million over two years to support state and territory governments in accelerating prefabricated and modular home construction, alongside a national certification process. That commitment stands and the programs are being rolled out.
For volume builders already using or investigating modern methods of construction, this signals continued government alignment with industrialised building as part of the supply solution. It is worth understanding what program funding is available in your state and whether your business is positioned to access it.
The Foreign Buyer Ban and Land Banking Crackdown
The two-year ban on foreign buyers purchasing existing dwellings took effect from 1 April 2025 and remains in force. This reduces competition for established housing without directly affecting new construction.
More relevant for developers is the ATO’s increased enforcement of foreign investor land banking. The government has allocated $8.9 million to improve compliance and audit capabilities targeting foreign investors who hold vacant land without developing it within reasonable timeframes. For domestic developers, this signals that the government is paying closer attention to land supply mechanics.
What Builders Should Do Before 12 May
This budget has more moving parts than most. The temptation is to wait and see. For most builders that is probably the right call on operational decisions. But a few things are worth doing now.
If you are working on multi-residential projects that depend on investor pre-sales, have a conversation with your development finance team about what a 33 per cent CGT discount scenario looks like for your project’s numbers. Not because it is confirmed, but because being prepared is faster than being reactive.
If you have clients who are investors and are asking whether to transact before budget night, be careful. That is a conversation for their accountant or financial adviser, not your sales team. The wrong answer from the wrong person could create liability.
If you are a small volume builder and your work is primarily first-home buyers and owner-occupiers, the direct budget impact on your pipeline is likely to be modest. The schemes in play, including Help to Buy and the first home buyer housing program, are broadly supportive of that market.
And for everyone: read the budget detail on the night, not the headlines. The headline will almost certainly oversimplify what was actually announced.
The Bottom Line
The May 2026 budget is shaping up as one of the most consequential for property and construction in a decade. The CGT and negative gearing changes are the headline risk. The housing supply pipeline is the headline opportunity.
The industry wants the government to focus on supply barriers, not investment disincentives. Whether that argument lands in the budget papers will become clear on 12 May.
The Good Builder will have a full analysis published the morning after budget night.
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