All first home buyers in Australia will be able to get on the property ladder with a lower deposit sooner, as a federal scheme kicks in earlier than scheduled.
The government's expansion of the First Homebuyer Guarantee will allow all first-home buyers to put down a deposit of 5 per cent, and will start rolling out from 1 October, three months earlier than its original start time of January 2026.
The earlier start date for the scheme would reduce hurdles to entering the property market, Prime Minister Anthony Albanese said.
"We want to help young people and first home buyers achieve the dream of home ownership sooner," he said in a statement.
"Bringing the start date of our 5 per cent deposit scheme will do just that, getting more Australians into their home quicker, while saving money along the way."
What is the first home buyer scheme?
The scheme allows first-home buyers to buy a property with a smaller 5 per cent deposit, compared to the usual 20 per cent.
The government acts as guarantor and contributes the remaining 15 per cent of a deposit, allowing buyers to avoid taking out costly lenders' mortgage insurance.
What changes are coming to the scheme?
While the scheme isn't new, it will be expanded from 1 October to all first-home buyers — after previous versions had a yearly cap on the number of participants.
Similarly, there will no longer be income limits for participants' eligibility for the scheme.
Price caps for eligible homes in the scheme in almost all jurisdictions will also be raised from October.
Housing Minister Clare O'Neil said the scheme would make access to home ownership fairer. Source: AAP / Mick Tsikas
It's estimated 70,000 people are expected to use the home guarantee scheme in its first year of expanded access, 20,000 more than the current yearly cap.
Housing Minister Clare O'Neil said the scheme would make access to home ownership more equitable by "levelling the playing field", particularly for younger people entering the property market.
"It's just not right that an entire generation of young Australians have been locked out of the housing market, saving for decades while paying off someone else's mortgage."
Property prices will 'certainly rise'
AMP chief economist Shane Oliver told SBS News the scheme would likely be popular, as home buyers spend on average around 11 years saving for a 20 per cent deposit.
"It does give a leg up to first-time buyers over existing home buyers and investors," he said.
"The scheme will be pretty popular and you're going to find a lot of buyers trying to get in through this avenue, bringing forward demand and it could lead to competition in the property market, which has the effect of pushing prices up."
He said property prices will certainly rise, saddling first home buyers with larger mortgages and ultimately debt.
"You can get a 5 per cent deposit in just a few years. But you will have 95 per cent of your debt to pay off, that's a very high level of debt."
However, for some people it may be better financially to buy a property sooner, as the market could move against you while you save a 20 per cent deposit.
The Reserve Bank of Australia's interest rate cuts have also resulted in spikes in property prices, meaning homes across the country could increase in value even more.
"If you've got falling interest rates and the startup of this expanded scheme, it could supercharge the boost to property markets that otherwise would not have occurred," Oliver said.
"So it's great news for existing home owners, but I don't really think it's good news for new home buyers."
What other reaction has there been?
The Housing Industry Association (HIA), the country's peak national industry association for the residential construction and development industry, welcomed the expansion.
HIA managing director Jocelyn Martin said: "This promises to open doors for more people and is an important boost for aspirational home buyers in Australia."
"This will make homeownership more accessible to those who may have previously been locked out of the market."
The Property Council of Australia said bringing forward the scheme would help more first-home buyers bridge the deposit gap and enter the market.
But CEO Mike Zorbas said on Monday the scheme design would need to be carefully reviewed on a regular basis from mid-2026 "to ensure key housing markets do not overheat".
Everybody's Home, a national campaign aimed at addressing Australia's housing crisis, partially through increased social housing, said the scheme was "good for some" but was "not a solution to the housing affordability crisis for all".
"The real solution to Australia's housing crisis is to bring down the cost of housing for everybody through measures including tax reform and more social housing," spokesperson Maiy Azize said.
"Too many Australians are locked out of home ownership because they are stuck in a rental market that makes it extremely difficult to save.
"To tackle the housing crisis, the federal government must make major investments in social housing; these are low-cost rentals that are guaranteed to remain affordable. Australia already faces a social housing shortfall of 640,000 homes, and that gap is only widening."
Opposition housing spokesperson Andrew Bragg was critical of the scheme being open to all first-home buyers without any income testing.
"This is an uncapped scheme which is available to billionaires, or the children of billionaires, if they want to use a government program," he told ABC radio on Monday morning, warning of taxpayers "underwriting mortgage insurance schemes for extremely wealthy people".
What other changes are coming to housing?
The scheme's earlier start date comes as upcoming changes to the national construction code were paused to allow for homes to be built quickly.
The code will be put on hold until 2029, with the exception of safety standards, which have been touted as reducing complexity for workers in the construction industry.
The pause follows the federal government's productivity roundtable, which also led to the fast-tracking of environmental approvals for more than 26,000 homes.
— With additional reporting by the Australian Associated Press
