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From 1 October, the Home Guarantee Scheme (HGS) expansion will raise the property price caps across each state and territory.
Under the current price caps, first home buyers (FHBs) can only purchase property of median value in around a third of Australia’s 4,848 markets, according to a study from Cotality.
Under the expanded HGS, these borrowers will be able to access 63.1 per cent of these properties. This equates to 51.6 per cent of house markets and 93.7 per cent of unit markets.
According to Cotality economist Kaytlin Ezzy, the scheme prior to the expansion meant FHBs were siloed into purchasing more affordable property, often in regional areas.
The expansion of property price caps will allow more choice for FHBs to purchase suitable properties, all while securing a 5 per cent deposit.
This will also mitigate challenges with property price increases, pricing out FHBs.
Recent data from Canstar in anticipating the 2025 spring selling season will push property prices up by $154,000 by the end of 2026.
Another study from Lateral Economics predicted a 3.5 to 6.6 per cent increase in property prices in 2026 and for several years afterwards, off the back of the expanded HGS.
“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,” said Ezzy.
“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.
“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.”
As listed by Housing Australia, the changes to property prices, from 1 October, are:
- NSW: Capital city and regional centre (from $900,000 to $1,500,000)
- NSW: Other (from $750,000 to $800,000)
- Victoria: Capital city and regional centre (from $800,000 to $950,000)
- Victoria: Other (to remain $650,000)
- Queensland: Capital city and regional centre (from $700,000 to $1,000,000)
- Queensland: Other (from $550,000 to $700,000)
- Western Australia: Capital city (from $600,000 to $850,000)
- Western Australia: Other (from $450,000 to $600,000)
- South Australia: Capital city ($600,000 to $900,000)
- South Australia: Other (from $450,000 to $500,000)
- Tasmania: Capital city (from $600,000 to $700,000)
- Tasmania: Other (from $450,000 to $550,000)
- ACT: From $750,000 to $1,000,000
- Northern Territory: To remain $600,000
- Jervis Bay Territory and Norfolk Island: To remain $550,000
- Christmas Island and Cocos (Keeling) Islands: To remain $400,000
This article was first published in Smart Property Investment’s sister brand, Broker Daily.