Higher price caps and relaxed criteria ease market access for new buyers
The federal government’s Home Guarantee Scheme will undergo a significant expansion from 1 October, a change that property data firm Cotality says will broaden the range of suburbs accessible to first-home buyers.
The revised scheme removes previous income and place restrictions, and raises property price caps across much of the country. Eligible first-home buyers can now purchase with a 5% deposit and avoid lenders mortgage insurance, with the new settings making a greater proportion of the market accessible.
According to Cotality’s September Monthly Housing Chart Pack, only about one third of the 4,848 house and unit markets examined nationwide had a median value below the relevant thresholds, under the former price caps. With the updated caps, this figure rises to 63.1%, including 51.6% of house markets and 93.7% of unit markets.
“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,” said Kaytlin Ezzy (pictured top), economist at Cotality.
Ezzy noted that, under the old limits, buyers in Perth could only access two suburbs with a median house value under $600,000: Medina ($590,786) and Mandurah ($589,965). In Brisbane and Adelaide, most eligible properties were units, with only 36.9% and 41.3% of suburbs respectively meeting the previous criteria.
“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.” she said, “The new price caps represent a substantial increase for most regions and are designed to be more in line with each region's median house values.”
The new thresholds include a $600,000 rise to $1.5 million for Sydney, Illawarra, Newcastle and Lake Macquarie, and increases to $1 million and $900,000 for Southeast Queensland and Adelaide respectively.
With these changes, 51.6% of house markets and 93.7% of unit markets nationwide now fall within the scheme’s scope. Adelaide saw the largest increase in eligible house markets, with 46.6% of suburbs (130) now qualifying, up from 2.9% (8) previously. Brisbane recorded the greatest proportional rise for units, with 97.5% of suburbs (153) now under the cap, compared to 36.9% (58) before.
“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,” Ezzy said.
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