10/10/2025
Expert Column
By Miyi Kim, Managing Director, Riché Consulting
This financial planning column is brought to you by Riché Consulting.
Federal Government Announces Expansion of First Home Buyer Benefits
The Federal Government has announced an expansion and reorganisation of the Home
Guarantee Scheme, which was previously implemented on a limited basis for first-home
buyers. The new changes will take effect from October 1, 2025. This article will introduce the
background of this expansion, its main contents, and the responses to it.
As you may know, the two major topics in the recent real estate market are the decline in
interest rates and the decrease in affordability due to rising property prices. The base
interest rate is currently 3.6% after falling twice this year, with the possibility of further
declines in the future. Additionally, the rapid rise in property prices, centred around all state
capitals, has led to a decrease in affordability.
This has led to commentary that the era of Australia's younger generation being able to buy
a home through savings alone is over. The current reality is that even high-income earners
are unable to purchase homes in their desired locations, and a technique called "Rent
Vesting" is being recommended. Prime Minister Albanese has stated that the purpose of this
policy expansion is to help the younger generation achieve their dream of homeownership
by improving accessibility to their first home.
Key Details of the Expanded Scheme
No Place Limits: The scheme is open to all Australian first-home buyers. Applicants are
eligible with a deposit of just 5% of the purchase price. Additionally, the Lender's
Mortgage Insurance (LMI) that must be paid when pursuing a 95% mortgage is waived.
No Income Caps: High-income earners are eligible to apply.
Higher Property Price Cap: The scheme can be used for the purchase of higher-priced
homes. According to government estimates, an individual in Melbourne could purchase
an $800,000 first home with a $40,000 deposit under this policy and would not have to
pay approximately $31,400 in LMI.
However, it is important to note that while the policy will be implemented, the process of
assessing repayment ability by lenders, such as banks that provide home loans, will proceed
as before.
Criticisms of the Policy
A critical view of the federal government's announcement is that by removing restrictions
on applicants and income, the number of participants in the first-home market will increase,
raising concerns about future housing price hikes.
As mentioned, one of the reasons for this policy's expansion is the decline in affordability.
Critics argue that if these concerns become reality, the policy could ironically lead to a
further decline in affordability. Therefore, the dominant opinion is that an expansion of
housing supply is necessary to achieve the policy's objectives.
Conclusion
Despite the criticisms, the expansion of the federal government's Home Guarantee Scheme
is undoubtedly a clear opportunity for first-home buyers. First-home buyers should find a
cost-effective property and successfully purchase their first home with a minimal budget
(5%) while minimizing incidental costs (LMI).
About Riché Consulting
Since our establishment in 2009, Riché Consulting has consistently delivered returns to our
clients, aiming for successful asset growth through real estate investment. We are a
consulting firm with our own offices in Sydney, Melbourne, and Brisbane. Please feel free to
contact us anytime with any questions about real estate.
Inquiries: [email protected] Website: www.riche-consulting.com 33YouTube:
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Disclaimer: This column was written for a general understanding of real estate and we do
not assume legal responsibility for its contents.
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