A major housing shake-up is on the horizon, with the federal government’s fast-tracked Home Guarantee Scheme set to unlock thousands of affordable homes for first-time buyers, nearly doubling their options overnight. 

In new data released on Wednesday, property analytics firm Cotality found under the old price caps, around a third of the almost 5,000 house and unit markets analysed nationally had a median value below the respective limits.

The scheme, which allows eligible first-home buyers to avoid lenders mortgage insurance while purchasing a home with a five per cent deposit, will now remove income and place limits, while also raising property price caps across most regions. 

Economist Kaytlin Ezzy said the new settings will give first home buyers greater choice, while helping to level the playing field for those without access to the bank of mum and dad.

'Previously, to qualify for the scheme, first-home buyers were largely restricted to more affordable housing options, including units and houses in outer mortgage belts and regional markets,' she said.

Under the old caps, first home buyers in Perth had access to just two suburbs with a median house value under the $600,000 limit: Medina ($590,786) and Mandurah ($589,965). 

That cap will be lifted to $850,000 next month. 

'Since the caps were last revised in 2022, values across the mid-sized capitals have grown significantly, which has seen first-home buyers reliant on the scheme to purchase a house, essentially priced out,' Ms Ezzy said.

Across Sydney and the Illawarra, Newcastle and Lake Macquarie regions, the cap has increased by $600,000 to $1.5m. 

In Southeast Queensland and Adelaide, the caps have both increased by $300,000 to $1m and $900,000 respectively.

Adelaide saw the largest increase for houses, with 46.6 per cent or 130 suburbs now qualifying, up from just 2.9 per cent or just eight suburbs previously.

Brisbane saw the largest proportional increase for units, with 97.5 per cent of suburbs (153) now qualifying, up from just 36.9 per cent (58).

Rethink Residential director Mina O'Neill said the Australian property market is facing a 'perfect storm' with falling interest rates, a surge in listings, and the expansion of the Home Guarantee Scheme.

'It's creating opportunities, but also fierce competition, and buyers who move early are in the strongest position to benefit before the market heats up further.'

'What's intended to improve affordability risks widening inequality, as family wealth accelerates access for some while leaving others behind,' she said.

'With the cap raised to $1.5m in Sydney, no limit on places from October 1, and varying thresholds across states, the scheme is expected to fuel a fast-moving market.'

Ms Ezzy also conceded the scheme would put upward pressure on home prices.

'While this is a demand-side policy that will undoubtedly put some upward pressure on values, it will help create a more equitable starting point and provide more options for those looking to get on the property ladder,' she said.

Shadow Housing Minister Senator Andrew Bragg slammed the scheme for not being means-tested, meaning anyone can use it.

'Children of billionaires can now use the government's mortgage insurance scheme. What a country!' he wrote on X.

Real Estate Institute of Australia president Leanne Pilkington said the accelerated rollout would make it easier for more Australians to enter the property market.

The scheme was originally scheduled to start in January 2026. 

However Ms Pilkington said while support for first-home buyers is vital, it must be complemented by supply-side measures to address the housing shortage. 

'REIA also acknowledges the Government's commitment to build up to 100,000 homes exclusively for first homebuyers,' she said.

'Policies that boost supply and provide targeted support for entry into the housing market are essential.'

Source: www.dailymail.com.au