National dwelling prices fell by 0.4% in June, which is the largest monthly decline since December 2022. This follows a downwardly revised 0.3% fall in May (previously recorded as flat).
01 July 2026 | 2 mins
12.05.2026
NAB Economics and Markets Research has released its Fiscal Update on the Federal Budget.
Key points
- Despite the energy shock and RBA tightening cycle, the cyclical starting point for the 2026-27 Budget was positive, with above trend GDP growth and a tight labour market. Relative to MYEFO, the deficits have improved by $45bn over the forward estimates, as the government has elected to bank a portion of the improved revenue flows.
- The Budget forecasts that the underlying cash balance is likely to remain in deficit for the at least the next decade. The expected deficit for 2026-27 is $31.5bn. The headline cash balance, which accounts for “off balance sheet” expenditure or investment, is forecast to be $64bn in 2026-27, around 2.1% of GDP.
- Reform, restraint and resilience were the three self-nominated pillars that were used by the Treasurer to frame the budget. Generally speaking, the Budget addresses all of these.
- Reforms were largely as pre-announced. Negative gearing has been removed except for investment in new builds. The CGT regime will move to an indexation framework, with a minimum 30% CGT tax payable on net gains. However, investors in new builds will have the option of choosing the indexation arrangement or the old 50% CGT discount.
- These reforms remove the incentive to deploy capital into low yielding/high debt investments in property. This is a benefit to broader financial stability, but will likely mean a small decline in house prices and near-term upward pressure on rents.
- The government has been relatively restrained on cost of living measures, with the tax offset for working Australians small and not starting until July 2027.
- The government’s economics forecasts are broadly in line with the RBA’s and our own numbers. Growth will slow, inflation will rise and the unemployment rate will drift higher.
- We assess the stance of fiscal policy as neutral for the coming financial year, although this represents a change from expansionary fiscal policy in 2025-26. As such, the change in fiscal settings will better align with the RBA’s monetary policy ambitions.
For more detailed information, read the full Fiscal Update Report by Chief Economist Sally Auld.
