Investors and First Home Buyers Surge Back to Australia's Property Market

Australia's property market is experiencing a notable revitalisation, spurred largely by Labor’s recently implemented First Home Guarantee scheme.

Designed to make homeownership more accessible, this scheme allows first home buyers to enter the market with just a 5% deposit, bypassing the need for lenders’ mortgage insurance through a taxpayer-guaranteed 15% of the mortgage.

Since its introduction, it has sparked significant interest among prospective purchasers, marking a significant shift in the housing sector.

According to projections by Lateral Economics, the scheme is expected to appreciably inflate national home prices by 3.5% to 6.6% by 2026. However, more pronounced effects are anticipated in areas beneath the scheme's generous price caps, where property values may climb between 5.3% and 9.9%. The allure of new opportunities for first-time buyers has prompted an optimistic rush into the property market, evident through the positive signals reported by real estate agents.

Compounding this phenomenon is a concurrent surge in investor activity within the housing market. Data presented by Justin Fabo of Antipodean Macro highlights a remarkable increase in investor housing credit growth, which rose by 9.1% annually-the highest rate in a decade. Additionally, he notes that the volume of Google searches for "investment property" has reached unprecedented levels, the highest in over two decades. This aligns with a significant rise in house price expectations, with Westpac’s survey in August reaching a 15-year peak.

The confluence of first-home buyer enthusiasm and revitalised investor demand points to a heightened competition for properties, which could further inflate prices beyond their current high marks. With Australia already grappling with some of the most expensive housing markets globally, these trends pose substantial challenges to affordability across the nation.

Observers are now closely watching how the market will adapt to these pressures. The potential for increasing property prices can create barriers for future homeowners, intensifying the existing affordability crisis. Policymakers and stakeholders may need to explore additional measures to ensure that rising prices do not obstruct access to homeownership for new buyers, while balancing the needs of an invigorated investor segment.

Published:Friday, 3rd Oct 2025
Source: Paige Estritori

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Knowledgebase

Adjustable-Rate Mortgage (ARM):
A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.