Expanded home guarantee scheme triggers market frenzy across Australia

The announcement of the expanded Home Guarantee Scheme by the Federal Government has sparked a surge of activity in real estate markets across Australia. The scheme, which removes place and income limits and raises property price caps, allows more first home buyers to enter the market with just a five per cent deposit and no Lenders Mortgage Insurance. This change, set to commence on 1 October, has already had a significant impact on property prices and buyer behaviour.

According to the Real Estate Buyers Agents Association of Australia (REBAA), the anticipation of the scheme’s benefits has led to a noticeable frenzy among potential homebuyers. Melinda Jennison, President of REBAA, highlighted the rapid increase in property prices over the past month. “Properties that were selling for $750,000 last month are now selling for close to $800,000,” Jennison said. She noted that many buyers are panicking, with some purchasing properties sight unseen or overpaying in a rush to secure a home before the scheme officially starts.

Jennison expressed concerns about the long-term effects of the scheme, particularly in the absence of an increase in housing supply. “What was $800,000 will soon be $900,000, which will make it even more difficult for first-timers to secure finance for a home – even with the scheme’s five per cent deposit on offer,” she explained. The REBAA President advised property buyers to remain calm, adhere to their budgets, and seek expert advice from professional buyers’ agents to avoid overpaying due to fear of missing out.

The impact of the scheme is being felt across different states, with each region experiencing its unique market dynamics. In New South Wales, REBAA State Representative Linda Johnson reported an unprecedented level of competition since the recent interest rate hikes. “The onset of this competition has driven prices to set new records in some areas and shortened days on market,” she said. Johnson observed a marked increase in both investors and first home buyers seeking entry-level family homes near major centres, driven by a focus on capital growth and a desire to enter hotspots before prices rise further.

In Victoria, the market has seen heightened activity among first home buyers, particularly for properties under $900,000. Matt Scafidi, REBAA Victoria State Representative, noted, “Demand has lifted for properties under $900,000 – especially two-bedroom units and townhouses in the inner- and middle-rings – as buyers position themselves ahead of the October expansion.” Scafidi also mentioned faster pre-approval processes, stronger auction participation, and increased competition pushing up price guides late in campaigns.

Queensland has experienced similar trends, with a noticeable uptick in demand within the $650,000 to $800,000 price bracket. Melinda Granzien, REBAA Queensland State Representative, described the market as competitive, with first home buyers actively vying against investors. “Demand at inspections has been strong, with increased buyer attention at open homes and multiple offer situations becoming the norm,” she said. Granzien highlighted that medium- to high-quality properties are moving quickly, with some going under contract within a day of listing.

In Western Australia, the market has been characterised by a significant drop in listings, which have decreased by 25% since the start of the financial year, according to REBAA State Representative Peter Gavalas. This reduction in supply has put upward pressure on prices. “There has also been a remarkable shift in first home buyers in the market, especially in the under $750,000 budget in the inner-city suburbs,” Gavalas said. He anticipates increased activity in the sub-$850,000 market after 1 October, with more properties expected to come to market to capture this demand.

South Australia is also witnessing increased activity among first home buyers, who are showing greater confidence in the market. Jess Elam, REBAA South Australia State Representative, noted stronger competition for homes in the $600,000 to $800,000 price bracket, particularly in southern suburbs like Seaford and Aldinga Beach. “The recent lift in eligibility has the potential to almost double the number of suburbs available to first home buyers,” Elam explained, predicting increased interest in fringe and inner-ring areas.

In Tasmania, buyer activity has surged in the $500,000 to $550,000 price range, with first home buyers and investors showing strong interest. Samantha Spilsbury, REBAA Tasmania State Representative, noted a shift in buyer preferences towards larger land sizes and long-term value over proximity to the city. “First home buyers, in particular, are showing increased interest in outer suburban areas, where they can secure a minimum three-bedroom, one-bathroom home on a block of at least 600 square metres,” she said. The broader uplift in inspection attendance across the sub-$750,000 bracket is likely supported by the Tasmanian Government’s first home buyer incentive, which offers full stamp duty exemption on purchases under $750,000.

As the expanded Home Guarantee Scheme takes effect, the Australian property market is poised for further changes, with first home buyers and investors eagerly navigating the evolving landscape.