The government's post-budget messaging has focused heavily on first home buyers. Treasury modelling claims the negative gearing and CGT changes will free up approximately 75,000 homes for first home buyers over the next decade. The infrastructure fund, the affordable housing extensions, the foreign buyer ban — each has been presented as meaningful relief for people trying to get into the market. The reality is more modest. When you break down the numbers, the budget delivers genuine but limited benefits for first home buyers, and the biggest factors affecting affordability — interest rates, deposit requirements, and construction costs — remain unchanged. Here's an honest assessment of what changed and what didn't.
The 75,000 Homes Claim — What It Actually Means
The government's headline claim is that the negative gearing and CGT changes will free up approximately 75,000 additional owner-occupier opportunities for first home buyers over the next decade. Broken down, the numbers are more modest than they sound:
| Figure | Number |
|---|---|
| Homes freed up (Treasury modelling) | ~75,000 over 10 years |
| Per year | ~7,500/year |
| Annual first home buyer purchases in Australia (ABS, 2025–26 estimate) | ~110,000/year |
| Budget's proportional impact | ~7% more homes available per year |
That's not nothing. But it falls well short of a structural fix to housing affordability. The mechanism is also indirect — the policy reduces the after-tax return on established residential investment properties, which is expected to cause some investors to sell rather than hold or buy. Those properties then enter the market as potential first home buyer purchases.
On price impacts, different sources reflect different things. Treasury modelling points to house price growth moderating by approximately 2 percentage points for a couple of years — a slowing of growth, not an immediate fall. CBA separately estimates house prices could be approximately 3% lower than they otherwise would have been by the end of the decade. On a $750,000 Sydney unit or outer-suburban property, that is a saving of approximately $22,500 — meaningful, but not transformative.
Note on current Sydney prices: Sydney's house median is currently around $1.6 million, having fallen 1.4% over the past three months as rate hikes weigh on buyer demand. ANZ now forecasts Sydney housing prices to fall 0.7% over 2026. The pre-budget forecasts of $1.92 million have been revised down significantly following the three 2026 rate hikes.
What the Budget Actually Delivers for First Home Buyers
The Direct Measures
- Foreign buyer ban extended. The ban on foreign purchases of established dwellings has been extended. This removes a small but real source of competition in the established market, particularly in high-demand suburbs in Sydney and Melbourne. The practical impact is limited — foreign buyers represent a small share of overall purchases — but the extension signals intent.
- $2 billion local infrastructure fund. Funding for infrastructure in new housing development areas — roads, sewerage, utilities — to unlock supply in growth corridors. This is a longer-term supply measure with a 3–5 year lag before it translates into available dwellings. It will not help first home buyers in the near term but could improve supply in outer suburbs and regional areas from 2028–2030.
- Affordable housing support. Additional funding for social and affordable housing via the Housing Australia Future Fund. Directly targeted at the lowest-income households and renters — not first home buyers in the conventional sense.
The Indirect Effects
- Reduced investor competition in the established market from 1 July 2027 as NG changes bite
- Modestly slower house price growth over the medium term (Treasury: 2ppt growth moderation; CBA: 3% level impact relative to baseline)
- Redirected investor demand toward new builds — potentially increasing apartment supply in undersupplied markets
What the Budget Didn't Change for First Home Buyers
The three biggest obstacles to first home ownership remain unchanged:
The Three Unchanged Barriers
| Barrier | Current reality |
|---|---|
| Interest rates | Cash rate at 4.35% — highest since 2011. Monthly repayments on a $700,000 loan ~$4,000/month at a typical 6.60% variable rate. Budget has no direct impact on rates. |
| Deposit requirements | A 20% deposit on the Sydney house median of $1.6M requires saving $320,000. Even saving 20% of a $120,000 household income after tax takes close to a decade. The existing guarantee schemes were not expanded in this budget. |
| Construction costs | High materials, labour, and approval costs remain severe. The combination of 4.35% interest rates and elevated construction costs makes new builds expensive for investors to finance, limiting how much new supply the NG carve-out actually generates. |
What First Home Buyers Should Actually Focus On
Given the modest near-term impact of the budget, what actually moves the needle right now:
1. Government Schemes Already Available
- First Home Guarantee: 5% deposit, no LMI, available now through approved lenders. Already covers most eligible first home buyers following its expansion in 2025.
- Help to Buy shared equity: eligible buyers can purchase with as little as 2% deposit, with the government taking up to 40% equity share for new homes and up to 30% for existing homes — launched December 2025, currently available through CBA and Bank Australia (more lenders expected to join during 2026). See our full Help to Buy guide.
- FHSS Scheme: save up to $50,000 inside super taxed at 15% instead of your marginal rate. See our full FHSS guide.
These schemes are available now and have a direct, meaningful impact on what you can buy and when.
2. The Rate Outlook Matters More Than the Budget
The RBA's June 16 decision has a larger direct impact on first home buyer borrowing capacity and repayments than any of the budget measures. CBA has revised its 2026 price growth forecast down to 3% from 5% following the budget — but further rate hikes would weigh on prices further. A hold in June helps buyers more immediately than the 2027 investor rule changes.
3. Timing Your Finances Matters More Than Timing the Market
Price growth is moderating. First home buyers who use the next 12 months to maximise savings, improve their credit profile, and get pre-approval are better positioned — regardless of exactly when they buy. The schemes available now are worth far more than waiting for budget measures that phase in over a decade.
Written by Amit Narang, Mortgage Broker | Credit Representative 558902 of Outsource Financial Pty Ltd (ACL 384324)
Sources: Domain, "Australia's 2026 federal budget — what CGT and negative gearing changes mean for first home buyers"; Domain First Home Buyer Report 2026; Your Finance Guide, "Budget 2026 for First Home Buyers: What Actually Changed"; CBA, "2026 Budget: Updated housing outlook"; BDO, "Federal Budget 2026: Housing and construction"; ABS, Housing Finance data.
Want to Know Which Scheme Is Right for You?
The First Home Guarantee, Help to Buy, and FHSS all have different eligibility rules, income caps, and property price limits. We can walk you through exactly which combination works for your situation and get you pre-approved so you're ready when the right property comes up.
Get a Free First Home Buyer Assessment