How the 2026 Federal Budget impacts you & why modular construction is now front and centre

The 2026 Federal Budget has reshaped parts of Australia’s property landscape. While the measures are still proposals, the direction is clear: new construction is being encouraged, and established housing is facing tighter tax settings. For Western Australians building, investing, or developing, that shift puts modular construction in a stronger position than ever.

Here’s what it means for your land, your build, and your timing.

Residential investors and WA homeowners

From 1 July 2027, the Government proposes changes to tax settings for established residential investment properties purchased after Budget night.

Under the proposal:

• Negative gearing against salary income may be restricted
• The 50% CGT discount would be replaced with a CPI-indexed cost base method.

The key point is that newly built dwellings are proposed to be excluded. That means investors who build, rather than buy established homes, may continue to access full negative gearing and standard CGT treatment (subject to final legislation). For WA investors, this shifts focus back toward development, including modular builds on vacant land or new dwellings that increase housing supply. 

Note: adding a granny flat or secondary dwelling is not treated as a “new build” under the proposed settings. While these can still generate solid returns through rental income, depreciation, and asset uplift, they are not a tax structuring strategy.

Commercial Operators (including tourism, workforce accommodation, developers, lifestyle villages)

Commercial property is largely outside the residential tax changes, but infrastructure is the key driver. The Budget includes:

• A $2 billion Local Infrastructure Fund supporting regional enabling works.
• Continued investment in defence and industrial precincts across WA

These programs are designed to release development ready land and increase workforce demand. Once services are in place, attention shifts to activating sites.

Timing becomes critical. Traditional construction can slow delivery, while modular construction allows building off-site, reducing overall timeframes.

More broadly, the Budget reinforces a shift toward faster, more scalable construction methods. For operators, modular provides a quicker path from serviced land to operational asset.

Why Modular Construction matters more in this environment

The Budget reinforces a broader shift toward new supply, and modular construction aligns strongly with this direction.

It offers fixed price certainty, reduced reliance on local trades, and fewer weather-related delays. With construction completed off site, Redipods delivers a fully compliant, permanently fixed dwelling ready for use!

With ongoing infrastructure investment and sustained housing demand, conditions for new supply development remain strong. Speed and certainty are now key competitive advantages.

If you’d like to explore what’s possible for your site or project, the Redipods team is here to help. Explore how Redipods can transform your property and contact our Redipods team today.

Important: This article is general in nature and based on proposed Federal Budget measures as at May 2026. These measures are not yet legislated and may change. You should seek independent advice from a qualified accountant or financial adviser before making investment, tax, or construction decisions.