The federal government’s Home Guarantee Scheme is set for a significant expansion effective October 1, 2025, which is projected to unlock numerous opportunities for first home buyers across Australia. This fast-tracked initiative aims to assist eligible first home buyers in purchasing a home with only a 5% deposit, circumventing the need for lenders mortgage insurance (LMI). Key changes include the removal of previous income and place limits, alongside a substantial increase in property price caps across most regions.

Under the scheme’s previous limitations, only about one-third of the 4,848 house and unit markets analysed nationally had a median value below the set price caps. With the new, expanded limits, this figure dramatically jumps to 63.1% of markets now qualifying. Specifically, this includes 51.6% of house markets and an impressive 93.7% of unit markets nationally.

Cotality Economist Kaytlin Ezzy highlights that these new settings are designed to empower first home buyers with greater choice and help “level the playing fields for those without access to the bank of mum and dad”. Previously, first home buyers relying on the scheme were often confined to more affordable housing options, such as units or houses located in outer mortgage belts and regional markets. The price caps had last been revised in 2022, and since then, values in mid-sized capitals had grown considerably, effectively pricing out first home buyers seeking houses through the scheme. The new price caps are tailored to align more closely with each region’s current median house values.

Examples of the increased caps include Sydney and its surrounding regions (Illawarra and Newcastle and Lake Macquarie), where the cap has risen by $600,000 to $1.5 million. In Southeast Queensland and Adelaide, the caps have both increased by $300,000, reaching $1 million and $900,000 respectively. This expansion provides a marked increase in available options across various regions. For instance, in Adelaide, the proportion of qualifying house suburbs has seen the largest increase, rising from just 2.9% (8 suburbs) to 46.6% (130 suburbs). Brisbane recorded the largest proportional increase for units, with 97.5% of suburbs (153) now qualifying, up from 36.9% (58). Under the old caps, first home buyers in Perth had access to only two suburbs with a median house value under the $600,000 limit: Medina ($590,786) and Mandurah ($589,965).

While this expanded scheme is recognized as a demand-side policy that could introduce “upward pressure on values,” it is expected to foster a “more equitable starting point” and provide “more options for those looking to get on the property ladder”. This positive shift for first home buyers comes amidst a broader market context where national housing values continue to build momentum, rising 1.8% over the three months to August, and 4.1% over the past 12 months. The total value of residential real estate in Australia stood at an estimated $11.7 trillion at the end of August. Overall, this expansion aims to significantly ease the entry barrier for many aspiring Australian homeowners