The Albanian government’s revamped first home buyer scheme, introduced late last year, may be working against those on the hunt for an affordable home, new data shows.
The government raised the price and income ceilings of its First Home Guarantee Scheme in October, expanding the number of people who could buy with a 5 per cent deposit without having to pay expensive lender mortgage insurance.
Analysis of price growth figures has shown that since September last year, cheaper homes within the price ceilings have generally recorded stronger growth than homes above them.
According to the Real Estate Buyers Agent Association of Australia (REBAA), competition for these affordable homes will continue to increase as the number of new listings decreases nationally.
The Albanian government’s five percent deposit program has increased the price of houses within the $1.5 million price ceiling. Photo: Jason Edwards/NewsWire
KPMG chief economist Brendan Rynne said the housing market showed “unexpected strength” in the second half of 2025, fueled by the Labor government’s policies and persistent inflation, which pushed house prices much higher than expected.
“While the five per cent deposit scheme offers Sydney’s higher price cap of $1.5 million, expanding options, in practice most first home buyers are still limited by borrowing capacity and cannot afford the required mortgage, even at the lower end of the city’s market,” he said.
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Since the beginning of this decade, national housing affordability has declined, while the value of home loan repayments as a percentage of income has increased. Photo: KPMG
According to REBAA, the Australian housing market will face one of the “largest supply shortages in years”.
Currently, the total national housing supply is now about 10 percent lower than a year ago, according to SQM Research.
New research from KPMG’s latest Residential Property Outlook has predicted Sydney house prices will grow by a modest 5.8 per cent this year as the city’s position as a major jobs hub continues to attract buyers and offset affordability issues.
Mr Rynne said Sydney’s outlook for 2026 was one of “balanced growth”, which would be limited by ongoing supply and affordability issues.
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The value of new home loans has approached $1 trillion nationally. Image: KPMG’s housing market outlook
REBAA president Melinda Jennison said buyers are now competing in markets where quality inventory is scarce and selling quickly.
“We are not just dealing with seasonal fluctuations, because there is a structural shortage of offers and buyers are feeling the pressure nationwide,” she said.
“Despite the fact that not enough homes are being built, buyers in these cities are willing to pay more than the supply shortage would justify.
“As a result, the entry-level market will continue to outperform this year, with more young people seizing the opportunity to break the rental cycle and buy their first home faster, intensifying competition on the affordable side and ensuring prices remain firm.”
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The queue outside a recently opened house in Enmore, Sydney. Images: TikTok @innerwestsidestory
A recent one TikTok has shed light on the experience of Sydney’s first home buyers, and shows the fierce competition for a budget unit in the Inner West.
The video, captioned “POV: Trying to enter the Sydney property market in 2026!!!” [sic] has been viewed more than 61,000 times.
It documents a house open for a two-bed apartment in Enmore, which initially had a guide price of $700,000 but has since risen to $770,000 – a price $285,000 lower than the suburb’s average price of $1.055 million for a two-bed unit.
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The two bedroom unit on James St, Enmore
The inspection drew a huge line running down the stairwell of the apartment block, with the video’s creator joking that “everyone in the Inner West had the same idea”.
“It’s kind of depressing to be one of the many people fighting over these shoebox-sized apartments,” the creator said.
“But that’s the reality of the Sydney property market, I guess.”
One commenter who claimed to have been present at the inspection described the queue to view the property as “madness”.
The most liked response to the video was addressed to the Prime Minister – a sarcastic ‘Thank you Albo’ [sic].
A spokesperson for the Minister for Housing, Homelessness and Cities told The Daily Telegraph in November that the 5 per cent Deposit Program has “successfully helped more than 200,000 Australians buy their own homes sooner in recent years, while saving thousands on expensive lender mortgage insurance”.
“It remains an incredibly robust program – of the more than 170,000 guarantees issued, less than 0.01 percent have been paid out,” the spokesperson said.
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