The Labor government has delivered on its election promise to expand the Home Guarantee Scheme, cutting required deposits from 20% to just 5% for first-home buyers, effective October 1, 2025, instead of January 2026.
The move has been heralded as a major win for young Australians struggling in a supply-starved market.
Prime Minister Anthony Albanese insisted the change “will have minimal impact” on property prices, despite warnings that the lower deposit requirement could push prices higher and saddle buyers with 95% mortgages. “There will be a slight increase in prices, but already 185,000 Australians have benefited with minimal effect,” Albanese said, highlighting a $3 billion incentive for state governments to deliver 1.2 million new homes.
RBA Governor Michele Bullock cautioned that structural supply shortages will persist for at least two years, limiting any immediate impact on the housing market. Albanese countered, emphasizing the government’s “full suite” of measures, including Build to Rent programs, increased social housing, and renovations of unoccupied homes to accelerate access for buyers.
Housing Minister Clare O’Neil stressed the urgent need for young Australians to enter the property market now, highlighting the generational inequity compared to previous homebuyers. “We cannot tell them to wait until supply issues are resolved—they face a fundamental injustice,” O’Neil said. The government’s approach combines immediate support for first-home buyers with long-term construction initiatives, aiming to expand opportunities and alleviate the affordability crisis.
