More homes, more support and less red tape: key priorities for upcoming Federal Budget

Population growth is driving housing demand, but the Federal Government needs to fast-track innovative ways to increase supply and address rising construction costs, according to LJ Hooker.

Ahead of next week’s Federal Budget, Australia’s most iconic real estate brand has identified five key areas in a wish list to address the country’s ongoing housing crisis. This includes options for essential workers, incentives for downsizing, and reducing approval time for developers.

LJ Hooker Head of Research Mathew Tiller said despite high interest rates, property prices keep climbing and there are not enough homes being built. One solution is to see an increase in Defence Housing Australia type schemes.

“We have seen affordable housing starting to come in, but it is not on a massive scale, particularly in regional areas,” Mr Tiller said.

"Defence Housing Australia type schemes are a great model because they involve private investors and offer stable long-term rentals for families.

“We also hear about the missing middle, and the latest planning laws are aimed at bringing medium density to more town hubs and around train stations. We need to not just build more homes but offer properties that will appeal to downsizers. That isn’t studios or one-bedroom apartments; it is townhouses and larger three-bedroom apartments where the grandkids can stay over and in suburbs where older people want to live.”

Demand for sustainable housing is also increasing as buyers and investors seek greener and more energy-efficient living spaces. A survey commissioned by LJ Hooker found that almost three-quarters of respondents want to buy a property that is properly insulated and fitted with solar panels. Almost 60 per cent of home buyers revealed they also valued double-glazed windows and water-saving systems.

“Rising energy costs are shifting homebuyers’ priorities and this is an area that also needs to be included in the upcoming budget,” Mr Tiller said.

“Sustainable features aren’t just a trend, they are becoming a must-have. As eco-friendly living gains momentum, green properties will only become more desirable and valuable in the market.”

2025–26 Wish List

1. Support for builders to build more homes

Builders are going under at alarming rates, and new home construction has stalled. The biggest issue? It costs more to build a home than buyers can afford to pay.

• Help small and mid-sized builders with financing so they can complete projects.
• Provide tax breaks or subsidies to offset rising material and labour costs.
• Expand the National Housing Accord and fund partnerships to boost new housing supply.
  
  

2. Affordable housing for essential workers

For years, we’ve been calling for a Defence Housing Australia-style program for essential workers, and the need has never been greater, particularly in regional and rural locations.

Doctors, nurses, police, teachers and other frontline workers are being priced out of the communities they serve. A government-backed rental assistance program could:

• Provide affordable rental housing close to hospitals, schools and emergency services.
• Ease pressure on regional and metro areas struggling with worker shortages.
• Keep critical workers where they’re needed most.

If we want hospitals, schools, and police stations to function properly, we need to make sure their workers can afford to live nearby.

3. Make downsizing and rightsizing easier

Despite sales volumes increasing, turnover continues to remain at below average levels. We need more homes hitting the market, and one of the best ways to do that is to help older Australians downsize without financial penalties.

The government can:

• Extend the pension asset test exemption to give retirees more time to transition.
• Expand downsizer superannuation contributions so more people can use the proceeds from selling their home to boost their retirement savings.
• Cut stamp duty for downsizers moving to smaller homes.

This would free up larger homes for growing families and improve housing supply without building a single new dwelling.

4. Speed up planning and cut red tape

Currently, getting approval for new housing takes too long and costs too much. Developers face endless red tape, and holding costs remain high.

The Federal Government should reward states that:

• Speed up planning approvals and cut red tape.
• Fast-track big residential projects and allow more medium-density housing in key areas.
• Reduce developer holding costs by improving certainty around zoning and infrastructure.
  
  

5. Make homes more sustainable

We need to futureproof housing with affordable, sustainable upgrades.

• Expand solar and battery rebates to help homeowners cut energy costs.
• Offer tax incentives for energy-efficient renovations.
• Support the use of sustainable materials in new builds.

Sustainable homes lower power bills and reduce our carbon footprint.

More homes, better planning and targeted support for builders, downsizers and essential workers should be at the top of the government’s agenda.