First-Home Buyer Scheme Linked to 6.7% Rise in Affordable Home Prices

The Home Guarantee Scheme, expanded in October 2025, removed limits on the number of government guarantees available, allowing first-home buyers to enter the market with a deposit as low as 5% and without the need for Lenders Mortgage Insurance. While this initiative aimed to facilitate homeownership, it has also intensified demand for properties priced below the government's set caps.

Cotality's data indicates that eligible homes experienced a 6.7% price increase in the first six months post-expansion, nearly doubling the 3.6% rise observed in higher-priced properties. This trend suggests that the scheme may be inadvertently contributing to rising property prices at the lower end of the market, potentially offsetting its intended benefits.

Tim Lawless, Cotality's research director, commented that while the scheme likely temporarily lifted homeownership rates, it might work against the goal of improving housing affordability by boosting demand without addressing supply constraints. He noted that future first-home buyers could find it more challenging to enter the market as prices continue to rise.

In response, a spokesperson for Housing Minister Clare O'Neil stated that the government makes no apologies for assisting hundreds of thousands of first-home buyers while addressing a supply problem that has been generations in the making. The spokesperson emphasized that without the scheme, many first-home buyers wouldn't be able to enter the market at all.

Prospective buyers should be aware of these market dynamics and consider strategies to navigate the evolving landscape. Understanding eligibility for government grants and schemes, comparing various loan options and interest rates, and seeking expert guidance through the application process can help mitigate challenges associated with rising property prices.