The 2026 Federal Budget has put housing firmly back under the spotlight. For people planning a new build, renovation or extension, the headlines about tax reform and housing supply may feel a little distant. But they could influence the way people buy, build, finance and design homes over the next few years.
The short version: new homes are likely to receive more policy attention, energy efficiency is becoming harder to ignore, and early planning matters more than ever. That does not mean rushing into a project with a tape measure in one hand and panic in the other. It means understanding the direction of travel before you commit to a design brief, budget or site.
New builds may become more attractive to investors
One of the biggest Budget changes is the reform of negative gearing and capital gains tax. From 1 July 2027, the Government will limit negative gearing to new builds, while existing arrangements remain unchanged for properties held before Budget night. Investors who buy established housing after Budget night will have more limited deductions, while investors buying new builds will still be able to deduct losses from other income.
For homeowners, this matters because policy settings may shift more demand toward newly built homes, townhouses and apartments. That could increase interest in new housing supply, particularly in growth areas or locations where planning rules allow more density. It may also affect land values, development feasibility and competition for well-positioned sites.
For people designing a forever home, the takeaway is not “build whatever is quickest.” It is the opposite. If new homes become more attractive in the market, thoughtful design becomes an even stronger differentiator.
Infrastructure funding may unlock more housing areas
The Federal Budget includes a new $2 billion Local Infrastructure Fund to help councils and state utilities deliver the basics needed for new housing, including water, power, sewerage and roads. The Government says this will support up to 65,000 homes over the decade and bring total housing-enabling infrastructure investment to $6.3 billion.
That is the less glamorous side of housing policy, but it is important. Homes do not happen just because land exists. They need services, access, drainage, power and approvals. Without that, a block of land can become a very expensive waiting room.
For homeowners and second-home buyers, this reinforces the value of checking site constraints early. Before falling in love with a block or committing to a design direction, understand the infrastructure, planning overlays, access issues, service connections and likely approval pathway.
Victoria is also pushing planning and housing reform
For Melbourne homeowners, the Victorian Budget adds another layer. The Victorian Government has committed funding toward housing reform, building industry standards, planning system updates, faster decisions and unlocking more land for housing. It also points to more homes near train and tram zones, plus greenfield planning work for family homes with backyards.
This does not mean every block suddenly becomes easy to develop. Planning remains highly site-specific, especially in established Melbourne suburbs. Neighbourhood character, heritage overlays, setbacks, overshadowing, overlooking and council expectations can all shape what is possible.
This is where an architect can save homeowners from expensive assumptions. A good design process starts with the site, not Pinterest. The dream board can come later, wearing sensible shoes.
Energy efficiency is moving from “nice to have” to core brief
The Budget conversation is not only about buying and building. It is also about running costs. The Australian Government’s Cheaper Home Batteries Program has been expanded, with the Government saying it expects more than 2 million Australians to install a battery by 2030.
In Victoria, there are also hot water rebates available for eligible heat pump and solar hot water systems, including higher rebates for locally made products.
For home design, the lesson is simple: energy systems should be considered at the start, not tacked on at the end. Orientation, insulation, glazing, shading, ventilation, solar readiness, battery location, hot water systems and electric appliances all affect comfort and long-term running costs.
A beautiful home that is expensive to heat, cool or maintain is not really finished. It is just waiting to send invoices.
Renovators should think beyond resale
The Budget may put attention on new housing supply, but many Melbourne families will still choose to renovate or extend rather than move. That can make sense, especially if the location is right and the existing home has good bones.
However, renovation decisions should be made carefully. If more policy incentives flow toward new builds, established homes may need stronger design, liveability and performance improvements to hold their value. A renovation that simply adds floor area may not be enough. The better question is: what does this home need to work beautifully for the next 10, 20 or 30 years?
That might mean a smarter floor plan, better connection to the garden, improved natural light, a more flexible second living space, accessible design for ageing in place, or a thermal upgrade that makes the home more comfortable year-round.
What homeowners should do before starting a project
Before designing a new home, renovation or extension, homeowners should review three things.
First, clarify the purpose of the project. Is this a forever home, a second home, a future downsizer, a family base, or an investment-influenced decision?
Second, understand the site. Planning controls, orientation, slope, access, services and neighbouring properties can all affect the design.
Third, build energy efficiency into the brief. Solar, batteries, heat pump hot water, insulation and passive design are not separate conversations. They belong in the same room as layout, budget and lifestyle.
A better brief creates a better home
The 2026 Budget will not design your home for you. Thankfully. Budgets are not known for their spatial elegance.
But it does signal where the market is heading: more focus on new supply, more pressure on planning systems, more attention on efficient homes and more reasons to make good decisions early.
If you are planning a new build, renovation or extension in Melbourne, the best first step is a considered design conversation. Mark MacInnis Architect helps homeowners turn ideas, constraints and lifestyle goals into homes that feel resolved, practical and personal.
Speak with Mark MacInnis about your renovation, extension or new home design plans through the contact page on the Mark MacInnis Architect website.
Sources used
Australian Government Budget 2026-27: housing, infrastructure and first-home buyer measures.
Australian Government Budget 2026-27: tax reform, CGT and negative gearing.
AHURI summary of Federal housing measures and supply programs.
Victorian Budget 2026-27: housing reform, planning, energy and rebates.
ABC Budget analysis on negative gearing, CGT and expected housing supply impacts.
Australian Government Cheaper Home Batteries Program.
Solar Victoria hot water rebates.