Australia’s first-home buyer incentives are already reshaping buyer behaviour, with loan demand surging sharply since the expanded Home Guarantee Scheme came into effect. Early data shows policy-driven demand is colliding with low housing supply, raising fresh questions about affordability and future price pressure.
Key Takeaways
- First-home buyer loan demand has risen 70% since the scheme launched in October.
- Activity is strongest in the $750,000–$1 million loan range.
- Removal of income caps and higher property price limits have expanded eligibility.
- Demand is heavily policy-driven, rather than purely market-led.
- Inflation risks and stalled rate cuts could slow momentum later.
First-Home Buyer Demand Surges After Scheme Expansion
The federal government’s Home Guarantee Scheme, which allows eligible buyers to purchase with a 5 per cent deposit, has delivered an immediate boost to first-home buyer activity.
According to credit reporting agency Equifax, demand from first-home buyers jumped 70 per cent following the scheme’s introduction in October.
“In October 2025, we observed a 14 per cent increase in first-home buyer activity and an incredible 70 per cent increase in demand for new first home buyers applying for loans specifically in the $750k – $1m loan size range,” said Moses Samaha, executive director at Equifax.
Why the $750k–$1m Price Range Is in Focus
Several policy changes have widened the scope of the scheme, including:
- Removal of income limits for eligibility
- No cap on the number of applicants
- Higher property value thresholds
This has opened the door for buyers targeting more expensive homes.
“This specific loan bracket appears to be policy-driven,” Mr Samaha said.
“Once you account for a 5 per cent deposit, the resulting property values sit squarely against the Federal Government’s price ceilings for most capital cities and regional centres across the country.”
Sydney and larger NSW regional markets remain an exception, with higher price caps of up to $1.5 million.
Inflation and Interest Rates Could Cool Momentum
Despite the early surge, economists warn demand may not remain elevated if interest rate expectations shift.
Recent inflation data has raised concerns that further rate cuts may not eventuate, or that rates could even rise again.
“Despite the significant momentum in October, we expect new homeowner demand could slow down due to fading optimism for near-term rate relief,” Mr Samaha said.
He added that some demand was likely pulled forward by expectations of rate cuts that “have not, and may not, arrive.”
Affordability Pressures Remain
While the scheme is helping many buyers enter the market sooner, it also risks adding pressure to prices in an already tight housing environment.
“We’re operating in a complex environment,” Mr Samaha said.
“We have high demand from policy-incentivised first-home buyers clashing with historically low inventory. This could put more pressure on house prices and further create affordability challenges.”
