Key takeaways:
The 2026 Federal Budget includes staged tax cuts that may improve take-home pay and potentially affect borrowing capacity for some households.
Proposed changes to negative gearing and capital gains tax are designed to shift investor demand toward new housing supply rather than established homes.
Upgraders should focus on the “price gap” between selling and buying, rather than headline market movements alone.
New infrastructure funding and planning reforms may increase the supply of new-build housing over time.
If you’ve been in your current home for a few years, chances are you’ve started thinking about what comes next.
Maybe you need more space for a growing family. Maybe you’re looking for a better school catchment area , a shorter commute, or a home that better fits your lifestyle and long-term plans.
And while the 2026 Federal Budget hasn’t fundamentally changed the decision to upgrade, it has changed some of the financial factors that may shape how, and when, some households decide to move.
That doesn’t automatically mean now is the “right” time to move. Property decisions are highly personal and depend on your income, equity, borrowing capacity, future plans and comfort with repayments.
But the Budget may affect some of the numbers that shape those decisions, particularly take-home pay, lending assessments, housing supply and investor activity.
For homeowners considering an upgrade over the next few years, understanding those changes may help you plan more confidently and focus on your own numbers rather than market noise.
You might be interested in: Your step-by-step guide to upsizing to a bigger family home
Your borrowing capacity may improve over time.
One of the most relevant budget measures for many homeowners is the staged personal income tax cuts announced over the next two financial years.
While the changes are relatively modest individually, they may gradually increase after-tax income for many working Australians.
Under the announced reforms:
The tax rate on income between $18,201 and $45,000 is set to reduce from 16% to 15% from 1 July 2026.
The same rate is proposed to fall again to 14% from 1 July 2027
A permanent Working Australians Tax Offset (WATO) of up to $250 per year is also proposed from the 2027–28 income year.
The changes could reduce tax by up to $268 annually from 1 July 2026, rising to up to $536 annually from 1 July 2027, compared with 2024–25 tax settings.
Because lenders assess borrowing capacity using income after tax, higher take-home pay may improve how some households are assessed for lending purposes, depending on their broader financial position and lender criteria.
For dual-income households, even modest increases in take-home pay may help improve cash flow, savings buffers or repayment flexibility over time.
That doesn’t necessarily mean buyers should stretch their borrowing limits. But it may improve flexibility around repayments, buffers or property choice depending on individual circumstances.
“A tax cut can disappear quickly into everyday spending but putting that money into an offset account or onto the mortgage can help reduce interest and improve long-term financial outcomes,” according to Aussie Broker, Samantha Harvey.
An Aussie Broker can help model how these changes may affect your borrowing position based on your own circumstances.
Why the “price gap” matters more than market headlines
Much of the budget discussion has focused on the proposed changes to negative gearing and capital gains tax concessions for investors purchasing established residential property.
The proposed reforms are designed to encourage more investor activity toward new housing supply rather than existing homes.
Treasury modelling released alongside the Budget suggested the measures may reduce house price growth by around 2% over a couple of years, described as a “small and temporary” effect of the tax changes.
ANZ Head of Australian Economics Adam Boyton says isolating the effect of the reforms from broader market conditions may prove difficult.
“You’d expect in the near term that those tax changes probably put a bit more downward pressure on prices, but it will also be really difficult to work out what was the impact of the tax changes versus interest rates and broader uncertainty.”
For homeowners upgrading within the same market, headline market movements are often less important than the gap between the property they’re selling and the one they’re buying.
If market conditions soften, both sides of the transaction may be affected. Likewise, in a rising market, your existing home may increase in value while the cost of your next property rises too.
That’s why understanding your equity position, borrowing capacity and repayment comfort can be more useful than trying to perfectly time the market.
Managing the transition between selling and buying
One of the biggest practical challenges for upgraders isn’t choosing the property, it’s managing the timing.
You may find your next home before your current property is sold. Or you may need to exchange contracts before settlement funds become available.
Depending on your circumstances, there may be several ways to manage that transition.
Bridging finance
A bridging loan is designed to help homeowners purchase a new property before selling their existing one.
It typically uses the equity in your current home to help fund the new purchase during the transition period.
Bridging finance can help some homeowners manage the gap between buying and selling, particularly if they find their next property before their current home settles. But it’s important to understand:
how repayments work during the bridging period
what happens if your existing property takes longer to sell
how much equity is required
whether the repayments remain manageable under different scenarios
An Aussie Broker can explain how bridging loans work and whether they may suit your circumstances.
Deposit bonds
For some buyers, a deposit bond may provide an alternative to using a full cash deposit upfront when exchanging contracts.
This can be helpful if much of your available cash is tied up in your existing property or awaiting settlement.
As with any lending product, it’s important to understand the costs, risks and lender requirements before proceeding.
Simultaneous settlement
Some homeowners choose to settle both transactions on the same day to reduce overlap between loans and moving costs.
While this can simplify cash flow in some cases, it also requires careful coordination between buyers, sellers, conveyancers and lenders.
Understanding the timing risks early can help reduce stress later in the process.
What to check before you start house hunting
Before actively searching for your next home, it’s worth getting clarity on a few important numbers first.
Your current equity position
Understanding how much usable equity you have in your existing property can help determine:
your deposit position
upfront purchasing costs
borrowing requirements
whether the proposed loan amount is likely to fit within lender servicing requirements
Your realistic borrowing capacity
Borrowing capacity is influenced by far more than salary alone.
Lenders also assess:
existing debts
living expenses
credit card limits
dependants
interest rate buffers
loan type and structure
“The buyers who tend to have the smoothest experience are usually the ones who prepare early, so when the right property comes along they’re ready to move confidently and quickly,” said Harvey.
An Aussie Broker can help you understand what lenders are likely to assess today, — and how future tax changes may affect that position over time.
Your current home loan structure
If you’re on a fixed rate, it’s important to understand whether break costs may apply if you refinance or sell early.
You may also want to review:
offset account structures
redraw availability
portability options
loan features that may assist during the transition
Stamp duty and upfront costs
Upgrading to a higher-value property generally means higher stamp duty costs in most states and territories.
There may also be:
legal fees
moving costs
lender fees
buyers agent costs
renovation expenses
holding costs during the transition period
Building these costs into your budget early can help avoid surprises later in the process.
Considering a new build instead?
For some upgraders, building a new home or purchasing off-the-plan may become a more attractive option over the next few years.
The Budget included several housing supply measures aimed at increasing construction activity, including:
faster planning approvals
additional infrastructure investment tied to new housing development
Over time, these measures are intended to support more housing supply and increase the number of new homes coming to market.
The proposed negative gearing changes apply to investors, not owner-occupiers upgrading into a new home.
However, increased investor demand for new builds under the proposed rules could still affect some areas.
“We know that housing supply is a big challenge in this country,” said ANZ Bank economist Madeline Dunk
Dunk also pointed to labour shortages, infrastructure demand and construction capacity as ongoing pressures affecting how quickly new housing can be delivered.
If you’re considering a new build or off-the-plan property, it may be worth speaking with an Aussie Buyer’s Agent, conveyancer and broker before committing, particularly around timelines, valuations and contract conditions.
What does this mean for homeowners looking to upgrade
For most homeowners, the fundamentals of upgrading haven’t dramatically changed.
But it has changed some of the conditions around borrowing, household cash flow, investor demand and future housing supply that may influence how, and when, some Australians choose to move.
For many households, the most valuable step isn’t trying to predict the market. It’s understanding:
your current equity
your borrowing position
how future repayments may look
what buying and selling scenarios are realistically manageable
That's where getting clarity on your numbers, and your options, can make the process feel more manageable.
An Aussie Broker and Buyer’s Agent can help you model different upgrade scenarios, understand your finance options and work through the practical considerations involved in moving from one property to the next.