From 1 October 2025, Australia’s First Home Buyer Guarantee Scheme is getting a major expansion. First home buyers will be able to purchase a property with just a 5% deposit, no income caps, unlimited places, and higher property price caps across major cities.
Sounds like a big shift, right? It is. And it won’t just affect first home buyers—it’s going to ripple through the entire property market, especially for investors.
Quick Snapshot (For the Skimmers)
- 5% deposit required: Government guarantees the rest up to 20%.
- No income caps: Higher-income buyers can now use the scheme.
- Unlimited places: No annual quota like before.
- Price caps raised: Sydney up to $1.5m, Melbourne $950k, Brisbane $1m, etc.
- Likely effect: More competition at entry and mid-market levels → short-term price pressure, long-term depends on supply.
Why These Changes Matter More Than They Appear
When you change who can buy, how much they need up front, and what they can afford—you’re shifting demand. And in real estate, demand drives price, especially when supply is already tight.
How Property Prices May Move—City by City
City/Region | Short-Term Price Impact | Longer-Term Trend |
Sydney (inner/middle) | 5–10% rise in entry–mid suburbs. Low supply fuels bidding. | Slower growth later unless supply improves. |
Melbourne | 3–7% lift, strongest in suburbs with infrastructure upgrades. | Steady long-term growth. |
Brisbane / SE QLD | 7–12% pressure in outer suburbs. Big cap jump makes more suburbs “affordable.” | Strong upside if supply keeps up. |
Perth / Adelaide | 4–6% bump, more modest. Supply cushioning effect. | May outperform if East Coast overheats. |
Regional towns | Mixed—depends on local supply/demand. Some may surge, others stable. | Longer-term risk if jobs/amenities lag. |
The Psychology of the Market: FOMO, Urgency & Overreach
This isn’t just numbers—it’s psychology:
- FOMO kicks in: First home buyers see “5% deposit” and feel it’s now-or-never.
- Bidding wars ignite: More buyers chasing the same homes.
- Investors split: Some rush in before prices rise. Others step back, fearing overvaluation.
- Supply anxiety grows: Everyone knows housing supply is lagging. Extra demand + low supply = pressure and potential short term price jumps.
What Analysts Say vs. My Take
Government modelling predicts just a 0.5% increase over six years.
Personally? That feels way too conservative. Independent analysts and my experience suggest 3–6% in just the first 12–24 months as an average. Depending on the property type, suburb and their demand/supply metrics combined with demographics the price jumps can be higher in some locations.
Opportunities for Investors
- Just-outside suburbs: Areas near new price caps will see spillover demand.
- Affordable dwellings: Units in middle-ring & Houses in outer suburbs may benefit from new buyer interest.
- Pre-approval speed: Investors ready to act will win before bidding wars escalate.
- Balanced portfolios: Mix yield-focused and growth-focused investments.
Risks for Investors
- Competition inflating prices.
- Yield may fall as prices rise faster than rents.
- Affordability tightening for investors.
- Interest rate sensitivity.
Real-World Examples
- Sydney: Price cap rise to $1.5m now covers many Western Sydney homes. Expect intense competition.
- Melbourne: Suburbs like Preston & Coburg now fall within reach for first buyers.
- Brisbane: Ipswich and Logan may see double-digit demand pressure.
- Perth & Adelaide: Smaller but steady bumps, creating early-mover advantage.
What This Means for You (If You’re an Investor)
If you’re thinking, “Should I act before October, or wait?”—here’s my advice:
- Don’t panic—the fundamentals still matter.
- Focus on locations with strong schools, transport, and jobs.
- Track suburbs now eligible under the new caps—get in before demand surges.
- Get finance pre-approval—speed will matter.
- Avoid FOMO bidding—value beats hype every time.
If this all feels like a lot (which it is), you don’t have to go through it alone. If you want, I can walk you through how the 1 October changes may affect your investment strategy —what price brackets make sense for you, and how to act without getting caught in the hype. Let’s set up an introductory call.