Home Guarantee Scheme Expansion

First let's look at what is changing

On October 1st, 2025, the highly anticipated expansion of the Home Guarantee Scheme expansion will take effect.

These are the key changes introduced by the Government:

• Elimination of Income Limits: Higher-income first-home buyers will now be eligible to access the scheme, removing previous income restrictions.

• Simplified Regional Access: The Regional First Home Buyer Guarantee will be replaced by the streamlined First Home Guarantee, making it easier for regional buyers to participate.

• Increased Property Price Caps: The scheme now features higher property price caps to assist homebuyers dealing with rising property costs. Detailed information on the new price caps can be found on the Housing Australia Website.

My Perspective on Government Policies and the Property Market

I’ve worked in the finance industry for approximately 30 years and I’ve seen how every government intervention in the housing market seems to have unintended effect on the Property Market. While the intentions might be to help buyers, the actual outcomes often end up making it more difficult for many Australians to own property. Here’s what I’ve observed about how these policies work, their impacts over time, and what they might mean for you.

A Look Back at Market Interventions

It all started back in 2000 with a $7,000 first home earners grant. From what I’ve seen, property prices across Australia jumped by at least that amount in every market. Why? Because once it was recognised there was government money involved, prices adjusted accordingly. This pattern has repeated over the past 25 years: each new scheme or grant tends to push prices up to match the additional support.

What the change on the 1^st of October will means

The Home Guarantee Scheme had a cap of $700,000 in most metro suburbs. This meant first-time buyers could access government support if they purchased properties below that level—usually in the $500,000 to $700,000 range. But starting October 1st, that cap is set to jump to $1 million, and even higher in some areas like Sydney.

Here’s my take:

• I believe this will shift the “bottom” of the market from around $700,000 to about $1 million over time.

My concerns about these changes

While I understand these moves are meant to “meet the market,” I personally see some risks involved:

• Raising the cap doesn’t necessarily make housing more affordable. Instead, it could just raise the entry price point, making it harder for those on lower incomes to get in.

• Rents could increase. When investors pay more for properties, they often pass those costs onto tenants, which could make housing less affordable even for renters.

• Competition might intensify, with investors and first-time buyers vying for the same properties, often to the detriment of those who are still trying to save for a deposit.

My view on the true issue

In my opinion, the core problem isn’t the support schemes—it’s a lack of supply. No matter how much government support is added, if there aren’t enough properties, prices will continue to rise. These policies tend to increase demand, which often results in higher prices and rents rather than solving affordability.

What I recommend

As someone working closely with clients, here are a few suggestions:

• Act sooner rather than later. If you’re thinking about buying, doing so before October 1st could help you avoid some of the projected price increases.

• Be prepared for rising costs. What costs $800,000 today might cost $1 million in the near future—so planning around this is important.

• Focus on your long-term goals. Don’t get caught up in the hype; look for genuine affordability and stability in your purchase. This may mean that you need to adjust or review where you buy and may not be able to purchase close to family or friends.

Final thoughts

From where I stand, I believe these policies, while well-intentioned, tend to push demand higher and don’t address the vital issue of supply. It’s frustrating, but staying informed and acting early can be beneficial.

If you’re unsure about how these changes might affect your plans or want tailored advice based on your situation, I’m here to help. Let’s work together to find the best path forward in this increasingly complex market.

For all those not already in the property market I do hope on this occasion I am proved to be wrong on my prediction!

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