Affordability challenges and limited supply aren't going away in the short term, but aspiring homeowners are rising to the challenge through innovative means
First-home are firmly front and centre of Australian housing market discourse right now.
The Labor government went to the May election armed with sweets aplenty for the nation’s FHBs, chief among them the Home Guarantee Scheme (HGS) expansion, which came into effect this month.
Under the expansion (originally tipped for January 2026, then brought forward three months), every FHB, regardless of income, can buy a house with just a 5% deposit. House price thresholds have been significantly lifted, while annual quotas have been entirely removed.
Make no mistake, Australia’s housing market is still among the least affordable in the world, although the Housing Industry Association forecasts that the HGS expansion could reduce the time needed to save for a deposit by up to four years.
Critics of the government’s FHB incentives argue they will blow house prices out even further – criticisms that are unlikely to sway Labor’s vote-winning strategy to help FHBs.
Coupled with long-overdue rate relief, a sense of optimism is merited in the FHB market right now. That has been reflected by steady, if not stellar, lending volumes at the nation’s major and regional banks.
Volumes stay the course
At Beyond Bank, first-home buyer volumes have remained largely consistent since 2021, with the exception of a peak in 2024.
“Recent rate cuts by the RBA are helping to ease the burden on borrowers that had purchased during recent years,” says Beyond Bank’s head of third party, Darren McLeod (pictured, right). Borrowers that were ahead in their repayments but lost some buffer when rates shot up should see this burden eased.
Meanwhile, lower rates are helping new entrants over the affordability barrier, while borrowers who have sat it out on the sidelines in recent years are perking up.
Perth-based Bankwest also expects to see more FHBs entering the market as lower interest rates boost borrowing power. The Bankwest Curtin Economics Centre Housing Affordability in Western Australia 2025 report revealed home purchase affordability issues or deposit constraints as the main reasons for renting, with only 44% of WA residents believing they’ll own a home in the future.
The report cited “a chronic imbalance between soaring demand and stagnant supply” in the state. And while overall lending activity has surged in WA, the share of FHB loans is in decline.
These findings suggest that FHBs in WA are losing ground to other homebuyers, both in terms of relative market presence and their ability to access homeownership. Yet Bankwest is proactively helping brokers to help their FHB customers.
“We continually strive to be the best bank for brokers in Australia by providing outstanding support and simple and efficient processes that deliver a smooth experience for their customers,” says Ian Rakhit (pictured, left), Bankwest’s general manager homebuying distribution.
The Bankwest Simple Home Loan, for instance, was introduced to meet the needs of customers – including FHBs – looking for a basic product with less fees and fuss. Sweeteners include no additional redraw costs and 100% offsets.
“We pride ourselves on the collaborative relationship we have with brokers” – Ian Rakhit, Bankwest
“Our simple and efficient digital experiences also help brokers set first home buyers up for success, with a seamless in-app experience to set up and manage their home loan – providing visibility and flexibility such as repayment options to suit their pay cycle,” adds Rakhit. “We pride ourselves on the collaborative relationship we have with brokers when it comes to creating secure, uncomplicated and genuinely useful digital banking experiences.”
ANZ has also seen sustained FHB growth over the last few years, particularly through the broker channel.
“It’s clear that first-time buyers are actively looking for support and guidance – not just with the loan itself but over their entire property journey,” says Natalie Smith (pictured, centre), general manager, ANZ retail broker.
“This is where brokers can really add value, because there are a few upfront costs that can take first home buyers by surprise – things like stamp duty, government fees, legal expenses and pre-purchase inspections.”
To help with this, ANZ has enhanced its home loan calculator, available now via the bank’s broker portal. The calculator gives brokers a clearer picture of upfront costs based on the buyer’s individual situation, making brokers better placed to help their clients.
Addressing affordability hurdles
While McLeod is pleased to see the Home Guarantee Scheme expansion go ahead, he warns that “this is only half of the equation”. Far more needs to be done on the supply side to create a truly balanced housing market for first home buyers.
“Working with the private sector to incentivise build-to-rent-style initiatives, either dedicated completely to affordable housing or at least with a portion dedicated, is a start,” says McLeod, as is “looking for opportunities to streamline the approvals process across the country at local, state and federal levels of government”.
“Any strategy that encourages homebuyers into the mortgage market in a prudent fashion is a plausible method in my view” – Darren McLeod, Beyond Bank
Beyond Bank intends to keep supporting the scheme with product offerings aimed at assisting brokers with the needs of their first home buyer clients. With income caps and quotas removed, and property price caps lifted from this month, McLeod expects to see more FHBs seeking access to the scheme.
Despite persistent affordability struggles, “there are some positives working in buyers’ favour”, says Smith from ANZ, highlighting a strong labour market, above-average wage growth, mid-2024 tax cuts and lower rates of inflation.
“That said, we know that housing affordability remains a challenge,” she says. “We’ve seen a drop in new property listings – both year-on-year and compared to the 10-year average – which has been a key driver behind recent price growth.”
Rising rents aren’t making the task any easier, notes Smith. “And that’s where our Family Security Guarantee can make a difference. By allowing a family member to use the equity in their home or investment property as security, eligible buyers could reduce their loan-to-value ratio and avoid paying lenders mortgage insurance. It’s one way we’re helping more first home buyers get into the market sooner.”
FHBs getting crafty
Although there is a variety of government incentives to tap into, a quick glance at Australia’s median house price-to-income ratio is a solid reminder of how much the chips are stacked against first-home buyers.
However, FHBs are proving an entrepreneurial bunch, with strategies like rentvesting and stepping-stone investing on the rise.
“Many first-home buyers are concurrently planning for a family, which may cause them to quickly outgrow a smaller home, so rentvesting allows them to purchase the house that best suits them in the future, instead of just what they can afford right now,” McLeod says.
Without adequate planning, rentvesters risk being stung by unexpected costs involved in renting out a property, but McLeod says “any strategy that encourages homebuyers into the mortgage market in a prudent fashion is a plausible method in my view”.
Restvesters are not able to tap government incentives, including the HGS (which requires a property be your primary place of residence), although “continuing to live where they want, whilst entering the property market and accessing potential capital growth and tax benefits via negative gearing, can still be a great strategy”, says McLeod. “This is where sound financial advice from a broker can assist borrowers weighing up the best lending solution to fit their needs.”
First-home buyers are also using the stepping-stone strategy to take advantage of government benefits and concessions. That could involve settling for a unit before working your way up to the Australian dream of a detached house on a big piece of green land, or moving away from the trendy city hotspots for a portion of your life.
“It’s clear that first-time buyers are actively looking for support and guidance – not just with the loan itself but over their entire property journey” – Natalie Smith, ANZ
But stepping-stone investing is a lifestyle sacrifice that not all are willing to make. Stamp duty alone can cost tens of thousands of dollars per move, while apartments have historically seen less capital appreciation compared to houses.
“Rentvesting and stepping-stone buying provide a way for first home buyers to get a foot on the property ladder and potentially take advantage of the benefits of capital growth,” says Rakhit.
However, he warns that “there are lots of things to consider, such as the costs of managing a rental property if rentvesting and the costs of moving house if stepping-stone buying, such as stamp duty, and the challenge of any changes in market conditions impacting your ability to save or build equity”.
“It’s important to consider your longer-term life goals. Knowing what you want to achieve and understanding the options available can help you get started on your property journey,” Rakhit says.
Smith also cites bridging finance – which allows buyers to leverage equity and move between properties without having to sell first – as a practical solution for those looking to make their next move. “It’s another way that brokers can support customers with flexible options in the current market,” she says.
So, is now a good time to buy your first home or not?
While house prices remain sky high in most regions, “this isn’t anything new”, says McLeod. “With so much uncertainty in real estate and the current housing crisis, it may be preferable for FHBs to take the security of getting onto the market now instead of waiting and hoping for a correction.
“If you are in the market and everything stacks up as to affordability and your future plans, now is as good a time as any for FHBs to take advantage of all the incentives and offers that are currently out there to assist in buying your first home.”
Rakhit says, “It’s always a great time to chat to your broker about your property goals and what’s the best strategy for your personal circumstances. Property ownership remains important to many Australians, and we’ll continue to support brokers to help first home buyers navigate the opportunities and complexities to start their homebuying journey.”
Smith agrees that “now is a great time for brokers to focus on first home buyers”.
“With interest rates easing and borrowing capacity increasing, younger buyers may be more actively seeking trusted advice,” she says. “We know that first-time borrowers are more likely to seek support from a broker – and importantly, they’re likely to return to their broker for help with future lending needs. Whilst the first home loan may be a starting point, it’s often the beginning of a long-term relationship.”
