One in ten homes purchased with support for first home buyers – realestate.com.au

Around one in ten homes sold in October were purchased by first home buyers using the 5% deposit scheme.

Government figures show that 5,778 first home buyer guarantees were issued in the month of October under the expanded 5% Deposit Scheme, previously known as the New Home Guarantee Scheme. On average, approximately 57,000 residential properties are sold each month across Australia.

That is an increase of 48% compared to the same period a year ago, when 3,901 guarantees were issued.

The scheme is intended to give eligible home buyers quicker access to the housing market and avoid having to pay Lenders Mortgage Insurance. From October 1, the scheme has been expanded to remove the limit on the number of places in the scheme. Income caps have also been abolished and property price thresholds have been raised to better reflect higher prices in different cities and regions.

National estate agency Raine & Horne has seen strong demand from first home buyers since the scheme was expanded.

Data from more than 300 national offices shows that 10% more people visited the open houses in October than the previous month (September 2025). It attributes the spike to the extended warranty scheme that is now in place.

“The increase in first-home buyer activity is having a ripple effect that extends beyond entry-level homes, helping to drive prices higher in the broader market as established homeowners look to upgrade to their second or third homes,” said Angus Raine, executive chairman of Raine & Horne Group.

Overcrowded house

While house prices were already rising before the scheme came into effect, the latest data shows that the Federal Government’s 5% deposit scheme has boosted demand and activity across the country’s housing market.

National prices have risen 7.5% over the past year, adding about $65,200 to the median home value, which now stands at $858,000, according to the latest PropTrack Home Price Index.

“Market momentum is increasing amid renewed buyer confidence and improved sentiment, supported by earlier rate cuts,” said PropTrack senior economist Eleanor Creagh.

“Looking ahead, this year’s series of interest rate cuts, population inflows and the expanded Home Guarantee Scheme will continue to stimulate demand.”

Meanwhile, mortgage brokers are seeing an increase in visitors to open homes and an increase in new buyer inquiries.

Mortgage choice real estate agent Terence Hammond said the expansion of the program has provided a huge boost to momentum ahead of what is traditionally a quiet December and New Year period.

“We have certainly seen an increase in demand from first home buyers since the scheme launched on October 1. It has made a huge difference to demand.”

Mr Hammond advises first home buyers to get their documentation together and make inquiries once they have their finances in order, describing the market as ‘aggressive’.

“A lot of people are showing up to open houses, which is driving up prices.”

The mortgage size is growing

The latest Mortgage Choice Home Loan Report shows that rising property prices are pushing many to take out larger home loans. Loan origination data for the September quarter shows that the national average loan size increased by 8.4% year-on-year to a new record.

Average loan sizes across the country:

Source: Mortgage Choice Home Loan Report, September Qtr. | *Total value of mortgage applications divided by the number of applications submitted in the September 2025 quarter.

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Anthony Waldron, CEO of Mortgg Choice, said loan sizes have increased in every region, bringing the national average loan size to more than $660,000.

“Annual growth was highest in Western Australia, where the average loan size increased by almost 12% year-on-year to $588,010.”

Buyers in South Australia and the Northern Territory are also facing increasing competition at the affordable end of the market, with the average loan size in the SA/NT region exceeding $600,000 for the first time, while the average loan size increases 10.6% year-on-year to $635,664.

“In South Australia there is a lack of supply of properties in the $600,000 to $800,000 price range, and when these properties are for sale they are on the market for less than 30 days,” Mr Waldron said.

“In the Northern Territory, most of the demand is driven by investors lured by the lowest average house prices in the country.”

Federal Housing Minister Clare O’Neil said the scheme only covers a small proportion of the total number of homes exchanged each month.

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With house prices reaching record highs across the country, Housing Minister Clare O’Neil said the 5% deposit scheme will help shave years off the time it takes a first-time buyer to get into the housing market.

But she said the more than 5,000 guarantees in October were small in the broader context of the number of home exchanges.

“We promised first home buyers that we would help them and that is exactly what we are doing,” Ms O’Neil said.

But Liberal Senator Andrew Bragg said the 5% deposit system is making Australian homes more unaffordable than ever.

“The Prime Minister and Housing Secretary Clare O’Neil like to brag that they are solving the housing crisis. But the stark reality is that if you fail to increase supply and increase demand, higher prices will emerge.”