What the Federal Budget means for homebuyers

It’s Federal Budget time, so let’s cut to the chase. What’s in it for aspiring homeowners looking to purchase a property in 2025?

Here are some of the key takeaways that could affect you.

Purchasing property

---

Help to Buy scheme

Labor plans to boost its Help to Buy scheme by increasing income and property price caps.

Under the scheme, the Federal Government will provide an equity contribution of up to 40 per cent to support eligible homebuyers (around 40,000 Australians) to purchase a home with a lower deposit and a smaller mortgage.

Around $800 million will be allocated to lift the property price caps and income caps from $90,000 to $100,000 for individuals, and from $120,000 to $160,000 for joint applicants and single parents.

Infrastructure investment

The 2025–26 Federal Budget has allocated $17.1 billion to various road and rail infrastructure projects across the country. It’s a good idea to be across these if you’re planning to buy, as they may affect housing development and surrounding property markets.

Examples include:

• $7.2 billion for safety upgrades on the Bruce Highway in Queensland.
• Over $2.3 billion for critical infrastructure upgrades in the growing Western Sydney region.
• A further $465 million for New South Wales to plan for regional projects and fix notorious choke points, including $250 million to upgrade Mona Vale Road and $115 million to reduce travel times on Terrigal Drive.
• $2 billion to upgrade Sunshine Station in Victoria.
• $350 million for the Westport – Kwinana Freeway Upgrades in Western Australia.

Read the full list here.

Foreign investors banned

The Government announced a temporary ban on foreign purchases of established dwellings for at least two years and said it would crack down on land banking.

From 1 April 2025 to 31 March 2027, foreign persons, including temporary residents and foreign-owned companies, cannot buy an established dwelling in Australia unless an exception applies.

The measure is intended to open up more opportunities for local property purchasers.

Prefabricated homes a priority

Labor will allocate $54 million towards the prefabricated and modular housing industry to boost home building.

Prefabricated homes are manufactured offsite in a factory, then transported to their final location for assembly. They’re said to take half the time to build as traditional brick and mortar homes.

The Government has also committed $120 million from the National Productivity Fund to incentivise states and territories to remove red tape preventing the uptake of modern methods of construction.

Incentives for housing construction tradespeople

Labor will introduce a new Housing Construction Apprenticeship stream, offering eligible apprentices in housing construction trades up to $10,000 in financial incentives. This measure is designed to address workforce shortages and boost housing supply.

Cost of living

---

New tax cuts and Medicare breaks

From 1 July 2026, the 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15 per cent. From 1 July 2027, it will be reduced to 14 per cent.

A worker on average earnings will get an extra $268 in their pocket in the first year, and $536 from the 2027–28 financial year.

The Government will also increase the Medicare levy low-income thresholds. As a result, more than one million Australians on lower incomes will be exempt from paying the Medicare levy or continue to pay a reduced levy rate.

More energy bill relief

The Government will extend energy bill relief to the end of 2025. Every household and around one million small businesses will receive two $75 rebates directly off their electricity bills through to 31 December 2025. 

Health

The Government plans to reduce the maximum cost of medicines on the Pharmaceutical Benefits Scheme (PBS) for everyone with a Medicare card and no concession card. From 1 January 2026, the maximum co‑payment will be lowered from $31.60 to $25 per script.

Cutting student debt

The Government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20 per cent, subject to the passage of legislation.

The Government will also increase the amount that people can earn before they have to start paying back their loans ($54,435 in 2024–25 to $67,000 in 2025–26).

Growing wages

The Government intends to ban noncompete clauses for low and middle income employees. This is expected to boost wages, with workers free to move to higher paying jobs. Aged care and childcare workers are set to receive wage increases.

Looking to buy a property?

There’s a lot to digest from the Federal Budget, but we’re here to answer your questions.

There have also been other election promises from Labor and the Coalition which could affect your purchasing plans. For example, a re-elected Labor government would allow all Australian first home buyers to buy with a 5 per cent deposit, avoiding lenders’ mortgage insurance, in an expansion of an existing scheme. The government will also commit $10 billion to build 100,000 new homes exclusively for first homebuyers, and will introduce a $1,000 instant deduction from 2026-27.

Meanwhile, the Coalition has vowed to allow first home buyers of newly built homes to deduct part of the interest paid on their mortgage from their income taxes if elected. The scheme would be limited to five years and participants would only be able to claim back the interest paid on the first $650,000 of their home loan, with no limit to the purchase price of the property.

If you need clarification about how any of the Federal Budget measures or election promises impact your property purchasing goals, get in touch today.