THE nation’s housing shortage has become a structural economic challenge, and more taxes on the sector are not the solution, the Housing Industry Association (HIA) has warned ahead of the 2026-27 Federal Budget.
HIA’s Pre-Budget Submission calls for a reset on housing policy.
It is urging the Government to focus on supply-side reforms across taxation, finance, infrastructure, planning, skills, and regulation to meet its target of 1.2 million new homes by 2029.
“Housing supply is no longer a cyclical issue – it is a macroeconomic problem,” HIA Managing Director Jocelyn Martin said.
“Persistent undersupply is contributing to inflation pressures, worsening rental conditions, and constraining economic growth.
“If we want to ease inflation, improve productivity, and restore affordability, we must remove the barriers preventing new homes from being built.”
Ms Martin stressed that housing is already one of the most heavily taxed sectors in the economy.
“Further tax changes – including to negative gearing or capital gains tax – would undermine investment, reduce feasibility, and worsen affordability,” she said.
The HIA also flagged the impact of lending restrictions on first home buyers, which it says are locking Australians out of the property market and adding pressure to rents without solving the underlying supply problem.
To address stalled apartment projects, the association proposed a national program to expand state-based pre-sale finance guarantees, which could unlock developments ready to go but held back by financing constraints.
Infrastructure funding is another priority. The HIA estimates that up to $5 billion is needed for “last-mile” enabling infrastructure to get homes shovel-ready sooner. Addressing construction workforce shortages is also crucial. The HIA recommends continuing employer apprentice incentives, funding pre-apprenticeship programs, creating targeted trade migration pathways, and improving skills recognition processes for migrants.
“Housing targets will not be met without a larger workforce. Business as usual will not deliver the trades numbers Australia needs,” Ms Martin said.
The association also called for reduced regulatory burden, including moving the National Construction Code to a five-year amendment cycle, providing free access to Australian Standards, and cutting cumulative red, white, and green tape that adds unnecessary costs to new homes.
“The Budget will be a test of whether housing supply is taken seriously. The focus must be on stability, coordination, and reforms that increase supply,” Ms Martin said.
