Last updated: 29 July 2026
2026-27 Budget · Housing supply
$2 billion Local Infrastructure Fund to unlock 65,000 new homes
The 2026-27 Federal Budget commits $2 billion to a new Local Infrastructure Fund to help local governments and state utilities build the water, power, sewerage and road connections that unlock new housing estates. The fund supports up to 65,000 new homes over the decade and brings total Commonwealth investment in housing-enabling infrastructure to $6.3 billion since 2022.
Where the money goes
$2.0b
New Local Infrastructure Fund
Up to 65,000 homes supported
$10b
100,000 Homes for First Home Buyers
$2b grants + $8b loans; a 2025-26 Budget measure, continuing
$47b+
Total Homes for Australia plan
Cumulative Commonwealth housing investment since 2022, updated by this Budget
Conditions for the states
Money from the Local Infrastructure Fund is only released to states and territories that commit to reforms the Government says are needed to unblock housing supply:
- Speeding up and simplifying planning approvals.
- Making more land available and ready for new homes.
- Simplifying application of the National Construction Code.
- Productivity-enhancing reforms in the housing sector more broadly.
Statement 1 of Budget Paper No. 1 notes that fully implemented National Competition Policy reforms with the states are expected to lift long-run GDP by around $13 billion a year, with housing supply a major contributor.
Supply, demand and the tax reforms
The supply measures sit alongside the negative gearing and CGT reforms. Treasury modelling in Box 4.4 of Statement 4 acknowledges the tax package will reduce investor demand for existing housing, with a knock on of around 35,000 fewer new dwellings over the next decade. The Local Infrastructure Fund's 65,000-home capacity is intended to more than offset that.
Exempting new builds from the negative gearing and CGT changes is a deliberate design choice: it keeps tax incentives pointed at supply while removing them from the established-stock market that has been the focus of recent investor activity.
Other supply-side commitments
- Build-to-rent: no new tax measure in this Budget. The existing settings – a 15% MIT withholding rate (cut from 30%, effective 1 July 2024) and a 4% p.a. capital works deduction – continue unchanged, and BTR entities stay carved out of the new negative-gearing rules.
- $59.4 million over four years to states to supplement Community Housing Provider rental income for over 4,000 young people at risk of homelessness.
- $100 million additional release from the Housing Australia Future Fund for First Nations remote housing.
- Ongoing rollout of 55,000 social and affordable homes nationally.
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Related reading
Frequently asked questions
How much money is the Budget actually putting into housing supply?
The new headline measure is a $2 billion Local Infrastructure Fund, lifting total housing-enabling infrastructure to $6.3 billion. The full Homes for Australia plan is now a cumulative $47 billion – a running total of Commonwealth housing investment built up since 2022, not a single new 2026-27 allocation – including the roughly $10 billion 100,000 Homes for First Home Buyers program ($2 billion in grants plus $8 billion in concessional loans to states and territories) that started under the 2025-26 Budget and continues to be funded here.
What is housing-enabling infrastructure?
Water, power, sewerage, roads and connections that turn raw land into developable lots. It's the unseen plumbing that often blocks otherwise-zoned land from being built on.
Will the money be split evenly across states?
No. The Local Infrastructure Fund is conditional. States and territories that commit to further planning, zoning and productivity reforms get access. The Government wants faster approvals, simpler National Construction Code application, and more land 'ready to go'.
How many homes will this fund actually build?
Treasury estimates the Local Infrastructure Fund will support up to 65,000 new homes over the decade. Combined with the supply implications of the tax reforms (a modelled 35,000 fewer dwellings) and other Budget measures, the net Budget supply impact is positive over the decade.
Source: Budget Paper No. 1, Statement 1 (pages 14-15, 18-19) and Statement 4 (Box 4.4), Australian Treasury, 12 May 2026.
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.