The government has implemented various new housing schemes to assist first-home buyers in purchasing property. New data shows that we may already be seeing their effects in the market.
Housing affordability is currently at close to record lows across most of the country.
This has made it difficult for buyers, particularly first-home buyers who tend to have less savings and fewer financial buffers.
With the purpose of helping more first-home buyers as well as single parents purchase a home, the Australian Government 5% Deposit Scheme and the Australian Government Help to Buy Scheme came into effect in late 2025.
From October 2025, the 5% Deposit Scheme was expanded, removing quotas on the number of applicants and income caps, while increasing property price caps. As a result, any first‑home buyer, irrespective of income, could purchase an owner‑occupied property with a 5% deposit and no lenders mortgage insurance, provided the property price threshold was met.
The Help to Buy Scheme, a new initiative that commenced in December 2025, allows eligible first home buyers to purchase a home with as little as a 2% deposit, alongside a government contribution of up to 30% or 40% for existing and new homes respectively. However, unlike the 5% deposit scheme, there are income caps and quotas on applications.
While these schemes are likely to have an effect on demand and prices, they often take time to materialise, however, early signs are already emerging in the data.
According to new lending indicators data from the Australian Bureau of Statistics, loans to first-home buyers rose 6.8% from the September to the December quarter in 2025 and are 9.1% higher than the December 2024 quarter.
Both annual and quarterly growth rates were at their strongest in two years, which may signal a return of first-home buyers to the market, especially after a period of stabilisation.
New South Wales, Queensland, Western Australia and the Australian Capital Territory recorded the strongest quarterly growth in first‑home buyer lending. As these markets have higher median home values, housing assistance schemes may be having a greater impact, particularly by easing upfront purchasing costs.
The number of loans to first-home buyers, nationally, are also at the highest level since March 2022.
Although interest rates are now well above their historical lows in 2022, these schemes have encouraged heightened activity from first-buyers by decreasing the time taken to save for a deposit and increasing the number of properties that fall within their budgets.
The influence of these schemes also appear to be reflected in home price growth across different price segments.
For dwellings priced under the capital city price thresholds (as per the 5% deposit scheme), the growth in prices has been stronger than those priced above the thresholds in every capital except Darwin and Canberra.
This suggests that demand has been higher for properties below the price caps, potentially reflecting a strong uptake of the government schemes following their implementation. With affordability becoming a bigger hurdle for first-home buyers, high levels of interest in these schemes is unsurprising.
With the recent interest rate hike and further rises expected in the upcoming year, the gap in growth rates between the two price segments may widen further as borrowing capacities decline.
It is worth noting, however, that first-home buyer loans make up just around 21-22% of total loans. This has remained the case since mid-2024. Whether their share of loans increases in the upcoming year will be an area to watch, as it will provide a better signal of rising first-home buyer activity.
While the number of loans to first-home buyers have risen and price segments below the thresholds for the 5% deposit scheme have grown more, there are other factors, beyond the schemes, that are influencing these trends.
During 2025, there were three interest rate cuts. Although rates were above their historical low throughout 2020-2022, they were at a two-year low which improved affordability slightly. This is one of several factors that may be supporting increased first-home buyer activity. Strong wage growth may be another, with wages rising at a similar or higher rate than inflation for most of the year.
Although there are early indicators of the schemes' effect on the market, they have only recently been implemented. It will be important to observe how they affect buyer behaviour, particularly first-home buyers and home price movements going forward.
