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Borrowers are grappling with record-low housing affordability. While there has been some relief during 2025, the inflated interest rates of 2022 and 2023, coupled with rising home prices, have placed immense strain on FHBs.
According to the PropTrack and CommBank’s First Home Buyer Report 2025, the typical income of a first home buyer household is $129,000.
This means that the average FHB could only service 17 per cent of the homes sold across Australia in the past year – the lowest figure on record.
To overcome these challenges, FHBs are taking advantage of every possible form of assistance out there, such as government grants, low deposit schemes, and lender’s mortgage insurance (LMI).
Rentvesting has also become a popular option, as well as purchasing in affordable suburbs or opting for an apartment, rather than a house.
Units and semi-detached homes are an extremely popular choice for FHBs looking to enter the market.
Melbourne leads the nation as an FHB hotspot. Of the top 20 suburbs for FHB activity, 60 per cent were located in Melbourne.
With NSW continuing to price FHBs out of the market, the state recorded the largest number of rentvestors.
The top two challenges remain saving for a deposit and servicing a mortgage. The average time it takes Aussies to save for a 20 per cent deposit is 5.9 years. For each state, the average time to save is:
- South Australia: 7.2 years
- NSW: 6.9 years
- Queensland: 6.1 years
- Victoria: 5.7 years
- Tasmania: 5.6 years
- Western Australia: 4.5 years
While the Home Guarantee Scheme has allowed FHBs to access 5 per cent deposits, the majority are continuing to save a 20 per cent deposit. The average loan-to-value ratio (LVR) of an FHB is around 85 per cent.
Despite affordability challenges, this cohort of borrowers continues to capitalise on all available opportunities.
As revealed in the report, there are more first home buyers entering the market now than pre-COVID-19 and far more than in the early to mid-2010s.
While activity is still far lower than the 2008–09 and 2020–21 rate cut cycles, the continued determination of FHBs is strong.
Challenges will remain, but REA Group’s senior economist, Angus Moore, said conditions are improving and expects greater opportunity to come.
“The good news for first home buyers is that conditions are improving. Interest rates have already fallen from their peak, and further cuts are expected. While home prices are rising, lower mortgage rates will likely help put more homes within reach of first home buyers,” said Moore.
Looking forward, CommBank’s head of Australian economics, Belinda Allen, is predicting another cash rate cut at the RBA’s November meeting, settling at 3.35 per cent.
This will provide some further relief for FHBs, but will also push prices up. Allen anticipates home values to continue to climb throughout 2025 and into 2026.
She called on the government to address affordability issues to addressing supply.
“More supply of housing is needed. All levels of government have a focus on housing supply in coming years, particularly focusing on first home buyers,” Allen concluded.