First-home buyer hotspots revealed amid “window of opportunity”

In a rapidly evolving real estate market, first-home buyers are being urged to act swiftly to capitalise on lower interest rates and expanded government schemes that are temporarily easing the path to home ownership. The latest PropTrack CommBank First-Home Buyer Report, released on Thursday, highlights both the opportunities and challenges facing first-time buyers in Australia.

The report underscores the ongoing struggle with property affordability and mortgage serviceability, but notes a silver lining: lower interest rates are making it easier for first-home buyers to enter the market. PropTrack executive manager of economics, Angus Moore, provided a hopeful outlook, stating, “The good news for first-home buyers is that conditions are improving. Interest rates have already fallen from their peak, and further cuts are expected.”

Melbourne has emerged as a focal point for first-home buyers, with seven of the top ten most popular areas located in the Victorian capital. This is a significant shift, as the city has historically been challenging for new buyers due to high property prices. However, the tide appears to be turning, offering a rare window of opportunity. “Recent government policies, low deposit loans and Lenders Mortgage Insurance are key enablers helping first-home buyers purchase,” Moore explained. “Many also seek homes in more affordable areas or purchase semi-detached homes or units to overcome affordability challenges.”

The report reveals that most first-home buyers are entering the market with less than a 20% deposit, leveraging government schemes and family guarantors to expedite their purchase. In Melbourne, Dandenong leads as the top hotspot, attracting nearly twice as many first-home buyers as the national average. Other popular areas include Brunswick-Coburg, Darebin, and Moreland.

Outside of Melbourne, Canberra’s Gungahlin and Molonglo regions, along with Hobart’s northwestern area, also feature prominently in the top ten hotspots. In Sydney, more affordable western and southwestern suburbs like Mount Druitt, Parramatta, Liverpool, Blacktown, and Campbelltown are drawing significant interest from first-home buyers. Brisbane’s outer areas, including the North Lakes region in Moreton Bay, Springwood–Kingston in Logan, and Forest Lake–Oxley in Ipswich, are also seeing increased activity.

Despite these promising developments, first-home buyers face mounting challenges as the spring selling season heats up. The PropTrack Home Price Index indicates that national home prices have risen for the eighth consecutive month in August, with recent interest rate cuts expected to further fuel price growth. This has led to increased competition, prompting some first-home buyers to enlist buyer’s agents to secure their ideal properties.

Nelson Alexander real estate agent Damian Ponte noted a noticeable increase in first-home buyer inquiries in Coburg. “It is a competitive landscape, with multiple buyers circling the same homes, particularly those that are well-presented and sit comfortably under the $950,000 threshold,” he said. Ponte also highlighted the impact of accessible deposits and improved serviceability on the market dynamics.

First-home buyers are grappling with two primary challenges: saving a standard 20% deposit and ensuring serviceability, or borrowing power, which depends on income and interest rates. With savings timelines extending to 5.9 years for an average-income household—and even longer in New South Wales and South Australia—many buyers are opting for smaller deposits. CommBank data reveals that the average loan-to-value ratio for first-home buyers is approximately 85%, indicating a trend towards smaller deposits facilitated by family guarantors, government schemes, or Lenders Mortgage Insurance.

The federal government’s Home Guarantee Scheme is set to expand in October, increasing property price limits across most of Australia and removing income caps. This expansion will significantly broaden the range of homes eligible for purchase through the scheme. In Sydney, the new price cap of $1.5 million will make two-thirds of homes eligible, up from less than a third under the existing cap. Melbourne’s new price cap of $950,000 will see 64% of homes become eligible, up from 51% under the current cap.

Ponte anticipates that the combination of rate cuts and the expanded Home Guarantee Scheme will drive a “surge of activity” in already in-demand suburbs like Coburg. “The window of opportunity could be short-lived before prices adjust upwards,” he warned. “Freestanding houses under $950,000 are becoming harder to find, so well-located townhouses, villa units and larger apartments are increasingly on buyers’ radars.” He advises first-home buyers to act while affordability remains in their favour, as competition “will only build as confidence returns.”

In a bid to enter the market sooner, approximately 6% of first-home buyers are choosing to ‘rentvest’, purchasing investment properties to lease out instead of living in them. However, experts caution that thorough research is essential before making such significant financial commitments. The quarterly Mortgage Choice Home Loan Report, released in August, found that more than half of borrowers (57%) wished they had conducted more research when selecting their first home loan.

CommBank’s head of Australian economics, Belinda Allen, commented on the broader economic landscape, noting that home prices are expected to rise over 2025 and into 2026 as the Reserve Bank of Australia continues its interest rate cutting cycle. “After cutting the official cash rate in February, May, and August, our current expectation is that the RBA will cut rates again once more and favour November as the next meeting to do so. This will see the cash rate settle at 3.35% by the end of this year,” Allen said. “Lower interest rates should improve borrowing capacity, helping first-home buyers. However, interest rates will remain well above pre-pandemic levels and challenges of housing affordability persist.”