The Australian Federal Government’s $3.5 billion new home bonus package is set to fundamentally change the relationship between state and federal housing policy.
This financial incentive, which was announced as part of the expanded National Housing Accord, directly links federal funding to state performance in delivering new homes.
This has moved the focus from input spending to measurable output.
What is the New Home Bonus?
The New Home Bonus is a performance-based funding mechanism designed to encourage states and territories to accelerate housing supply and exceed their National Housing Accord targets.
The National Cabinet agreed in August 2023 to raise the national target from 1 million to 1.2 million new, well-located homes over five years, commencing from July 1, 2024.
This increase of 200,000 dwellings is a direct response to Australia’s housing supply crisis. However, as of the March 2025 quarter, these figures are not being met.
The scheme is structured to provide financial reward for every new home built above a state’s share of the initial one million homes target.
This represents a significant shift in fiscal federalism within our industry, making housing supply an explicit, performance-based criterion for Commonwealth funding.
How is $3.5 billion to be spent?
The total $3.5 billion new home bonus is made up of two core components aimed at overcoming supply-side constraints:
$3 billion New Home Bonus
This is the primary incentive. The Commonwealth will provide $15,000 for each home built above a state or territory’s agreed share of the initial one million homes target.
These payments are not scheduled to commence until 2028, acting as a direct reward for jurisdictions that successfully implement planning reforms and significantly increase dwelling completions throughout the five-year period.
$500 million Housing Support Program
The Housing Support Program is a competitive funding program designed to immediately assist state and local governments in kick-starting housing supply.
Crucially, this funding targets essential enabling infrastructure, such as connecting utilities, roads, water, and power, and improving planning capability. This aims to address long-standing bottlenecks in the development pipeline.
Applications were open for this program as of March 2024.
The impact on state housing policy
The introduction of the $3.5 billion new home bonus mandates deeper engagement by state and territory governments in supply-side reform. To unlock the $15,000-per-dwelling bonus payments, states must commit to the National Planning Reform Blueprint, a set of measures agreed upon by the National Cabinet.
Key changes expected in state housing policy include:
- Zoning and density reform: States are expected to update strategic plans to reflect the new 1.2 million housing supply target and promote medium to high-density housing in areas with existing public transport and amenities.
- Streamlined approvals: Efforts will focus on simplifying and speeding up development approval pathways, with a specific emphasis on addressing barriers to timely issuing of approvals.
- Prioritisation of social and affordable housing: The blueprint includes reforms to support the rapid delivery of social and affordable housing, suggesting a greater consideration for tools like inclusionary zoning.
Ultimately, the structure of the $3.5 billion new home bonus means states that successfully reform their planning systems and deliver a larger volume of new homes faster will receive the greatest proportional financial benefit, creating a competitive, data-driven environment for housing policy across Australia.
Sources
- https://treasury.gov.au/policy-topics/housing/accord
- https://www.pm.gov.au/media/meeting-national-cabinet-working-together-deliver-better-housing-outcomes
- https://www.infrastructure.gov.au/territories-regions/cities/housing-support-program
- https://ministers.treasury.gov.au/ministers/julie-collins-2022/media-releases/applications-now-open-500-million-housing-support
