The Government has used Budget 2026 to announce a series of housing initiatives aimed at encouraging new development, supporting growing communities and increasing housing supply.
A key measure is the creation of the new Incentives for Growth Fund, with $400 million set aside over four years. From April 2027, councils will be eligible for payments linked to housing growth and development activity.
Councils can face significant costs when new housing developments require roads, water services and other infrastructure, according to the Government. These costs can discourage councils from supporting growth. The new fund is designed to help offset those expenses and create stronger incentives for councils to enable additional housing development.
Under the scheme, councils will receive payments based on housing growth, with those enabling higher levels of development receiving greater support. The Government hopes this will help fund the infrastructure needed for expanding communities while encouraging more housing construction.
The Budget also includes an additional $69.2 million investment in the Flexible Fund, which is expected to help deliver between 1,800 and 2,250 additional social and other homes over three years from 2028/29.
The Flexible Fund was established last year to replace a range of separate housing programmes with a more targeted approach. Rather than applying the same solution everywhere, funding is directed towards local housing needs. In some communities, that may mean smaller homes for individuals or couples, while other areas may need larger homes for families.
The fund also supports a wider range of housing providers, including community housing organisations and Māori providers, while giving those providers greater certainty to plan future projects.
Why housing supply matters
Housing affordability is influenced by many factors, including interest rates, incomes and population growth. However, housing supply remains one of the most important long-term influences.
When housing supply struggles to keep pace with demand, pressure can build on both property prices and rents. Increasing the number of homes available can help ease some of that pressure over time.
The Government hopes these measures will help deliver more homes in the locations where they are needed most.
Of course, housing projects take time to move from funding announcements to completed homes. Nevertheless, these initiatives signal an ongoing focus on increasing supply and supporting future growth.
Clients considering buying, investing or developing property may benefit from understanding how housing supply trends can influence future market conditions. We’re always happy to chat if you’d like to put us in touch.
