A scheme to allow all first homebuyers to purchase a property with only a 5 per cent deposit will begin in October, three months earlier than Labor promised at the federal election.<\/p>\n
That’s higher than the Treasury’s estimated impact of just a half a per cent additional price increase after six years.<\/p>\n
Others saw an even bigger potential effect \u2014 Louis Christopher, managing director at SQM Research, warned the impact of the scheme could lead to a more than 15 per cent increase over that same six-year period.<\/p>\n
“In the long-term, this stimulates demand, and will take away from affordability. Our view is that the scheme, combined with interest rate changes, could spark the biggest rush on housing since the GFC.”<\/p>\n
“I would not be surprised if the number of first home owners doubles to around 220,000 per year thanks to this scheme. The removal of the income cap is a strong growth stimulator,” he said.<\/p>\n
The broadened scheme, coming into effect from October, coincides with another factor tipped to push house prices higher \u2014 falling interest rates.<\/p>\n
According to figures from Cotality, national home values are already up by around 3 per cent since the start of 2025<\/a>, boosted by the Reserve Bank’s rate cuts in February, May and August. At least one more rate reduction is expected this year.<\/p>\n Commonwealth Bank data, published last week, revealed an already-increased appetite from buyers \u2014 applications for conditional pre-approval for home loans have jumped 12 per cent this year, as the rate cuts have filtered through to borrowers.<\/p>\n Saul Eslake, an independent economist, said the scheme might help some first homebuyers but failed to address underlying problems with Australia’s housing system.<\/p>\n “It would help if governments stop doing things that needlessly inflate the demand for housing.<\/p>\n Around 12 million Australians are home owners, with an estimated 110,000 new home owners each year. (ABC News: John Gunn)<\/p>\n “That includes first home owner grants, stamp duty concessions, excessively generous tax breaks for property investors, most of whom buy properties that already exist rather than fund the construction of new ones,” he said.<\/p>\n Around 12 million Australians are home owners, with an estimated 110,000 new home owners each year.<\/p>\n This makes first homebuyers a minority, which Mr Eslake argued makes it politically unpalatable to enact policy that would reduce home prices.<\/p>\n “Despite the fact that it is obvious that these policies have the effect of inflating the demand for housing and hence house prices, that is actually what a majority of Australian voters want governments to do, so governments of all political persuasions do it.”<\/p>\n What changes?<\/p>\n Labor took the policy to the federal election, with the stated intention of introducing it in 2026. It’s now being brought forward<\/a> by three months to October this year.<\/p>\n This means that from October, first homebuyers will be able to use the scheme to buy a home with as little as a 5 per cent deposit.\u00a0<\/p>\n They will not need to pay lenders mortgage insurance; which can add tens of thousands of dollars in the up-front cost of buying a property.<\/p>\n Income limits on one’s eligibility to access the scheme will also be removed from October.<\/p>\n The price cap for the scheme will rise from $800,000 to $950,000 in Melbourne, $900,000 to $1.5 million in Sydney, and from $700,000 to $1 million in Brisbane.<\/p>\n<\/p>\n