Tonight’s Federal Budget is expected to include a strong focus on housing affordability, property investment and cost of living pressures.
While no changes are confirmed until the Budget is officially handed down, there has already been significant discussion around potential housing, taxation and property-related measures that could affect borrowers, homeowners, first home buyers and investors.
Here are some of the key areas worth watching.
Housing affordability and supply
Housing affordability continues to be one of Australia’s biggest economic and political issues.
There has been ongoing discussion around measures aimed at increasing housing supply, including infrastructure funding and incentives designed to support new housing developments.
If additional housing supply measures are announced, the impact is unlikely to be immediate. However, over time, increased housing supply may influence affordability, availability and development activity across different regions.
For borrowers, this could also create opportunities in growth corridors and new housing estates where governments and developers focus future investment.
What is being discussed around negative gearing?
One of the biggest areas of speculation ahead of the Budget has been negative gearing.
Media reporting has suggested the government may consider limiting future negative gearing benefits to newly constructed properties only, while potentially grandfathering existing investment properties.
If a model like this were introduced, the stated policy objective would likely be encouraging more housing construction while reducing investor demand for established properties.
The practical impact would depend heavily on the final structure, including:
- whether existing investors retain current arrangements
- when any changes commence
- whether exemptions apply
- how lenders and markets respond
For investors, this is important because lending strategy, cash flow planning and long-term investment assumptions may all be affected differently depending on the final rules.
At this stage, no changes have been confirmed.
Capital gains tax discount changes
There has also been significant discussion around possible changes to the current 50% capital gains tax discount for assets held longer than 12 months.
Some reports have suggested the government may:
- reduce the discount percentage
- move to an inflation-indexed model
- apply different treatment to future asset purchases
- retain concessions for newly built housing
At this stage, these remain unconfirmed reports and speculation.
For property investors, any future changes could alter after-tax investment returns and may influence long-term holding strategies. However, the final impact would depend on transitional rules, grandfathering provisions and individual circumstances.
This is an area where investors should avoid reacting to headlines before confirmed legislation and professional advice are available.
Why new builds may become more important
A consistent theme across pre-Budget discussion has been encouraging new housing supply.
If tax incentives become more favourable toward newly constructed properties, this could increase investor focus on:
- house and land packages
- off-the-plan apartments
- newly completed dwellings
- development-style opportunities
From a lending perspective, this may also influence:
- lender appetite
- valuation approaches
- construction lending demand
- government incentive eligibility
That said, new builds also come with additional considerations including valuation risk, construction delays and market oversupply in some locations.
Borrowers should assess opportunities carefully rather than assuming newer properties automatically represent a better outcome.
First home buyer support
Support for first home buyers is also expected to remain a major focus.
This may include further discussion around:
- deposit guarantee schemes
- affordability initiatives
- support for new housing construction
- shared equity style programs
While these types of measures may improve access to the market for some buyers, the broader impact on property prices and affordability can vary depending on housing supply and market conditions.
For many first home buyers, understanding borrowing capacity and lender requirements early remains one of the most important steps regardless of any future government incentives.
Potential impact on first home buyers
One of the broader policy goals being discussed is improving housing affordability for first home buyers.
If investor tax settings change, some commentators believe this could reduce competition for established properties, particularly in lower and middle price brackets.
Others argue the impact may be limited unless housing supply also materially increases.
In reality, affordability is influenced by a range of factors including:
- housing supply
- population growth
- wages
- interest rates
- borrowing capacity
- construction costs
- lender policy
For first home buyers, government incentives can help, but understanding borrowing capacity and having a clear strategy remains critical regardless of policy settings.
Small business owners and self-employed borrowers
There has also been discussion around measures aimed at supporting small businesses, including the instant asset write-off.
Another measure expected to receive attention is the proposed permanent extension of the $20,000 instant asset write-off for eligible small businesses.
While this may provide taxation benefits for some businesses, self-employed borrowers should remember lenders assess income differently to the ATO.
Large deductions may reduce taxable income, which can sometimes impact borrowing capacity depending on the lender and assessment method used.
This is particularly important for self-employed borrowers considering:
- property purchases
- refinancing
- business lending
- cash out or investment strategies
This is why finance planning and tax planning should ideally work together, particularly for business owners considering expanding operations or restructuring debt.
Borrowers should seek accounting, taxation and legal advice relevant to their own circumstances before making decisions based on potential policy or taxation changes.
How the Budget could affect borrowing capacity
One of the biggest misconceptions around Budget announcements is that government policy automatically changes what someone can borrow.
In reality, borrowing capacity is still primarily determined by:
- lender servicing policy
- interest rate assessment buffers
- existing debts and liabilities
- living expenses
- employment and income stability
- deposit position
Even where new incentives or policy changes are introduced, lender credit policy will still play a major role in how applications are assessed.
This is why understanding your position early can be valuable, particularly in changing market conditions.
Our Blunt Take
There is always a lot of noise around Budget night.
Headlines move quickly and speculation often creates uncertainty for buyers and investors before the full detail is even available.
In our experience, most borrowers are better served focusing on the fundamentals:
- borrowing capacity
- cash flow
- loan structure
- long-term affordability
- flexibility for future plans
Government policy matters, but practical lending outcomes are still heavily influenced by lender policy, interest rates and individual financial position.
For borrowers considering a purchase, refinance or investment strategy, waiting for complete certainty can sometimes lead to delayed decision-making or missed opportunities.
The better approach is understanding your position clearly and making informed decisions based on confirmed information rather than speculation.
We Can Help You Make the Right Move
Budget announcements can create uncertainty, especially when housing, lending and property investment are involved.
Whether you are buying your first home, reviewing your current lending or planning your next investment purchase, understanding how changes may affect your borrowing position is important.
We can help you assess your options and build a strategy that suits your goals and circumstances.
Book a strategy session:
Book an Appointment with Shoreline Lending
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You can also contact us directly at:
- hello@shorelinelending.com.au
- (02) 4319 8173
Disclaimer
The information in this article is general in nature and does not constitute financial, taxation or legal advice. Budget measures discussed may be subject to change and may not proceed in their current form. Readers should seek professional advice relevant to their individual circumstances before making financial or investment decisions.