Everyone has an opinion about what the Federal Government’s First Home Guarantee expansion might mean, and there is significant divergence between the Government and expert commentators. Here’s the state of play today (1 October 2025) as the federal 5% deposit expansion kicks in, and what major outlets and analysts are saying about price effects.

What changed today

• The Home/First Home Guarantee has been expanded so any first-home buyer can purchase with as little as 5% deposit and no LMI, with unlimited places, higher property price caps (up to ~>$1m in some cities), and removed income caps. Government messaging frames this as bringing deposit-saving times down from ~11 years to 2–3 years. Housing Australia

What the news is reporting about prices

Slight price rise acknowledged by government

• The PM and ministers say Treasury modelling points to only a “slight” increase in prices, arguing the broader housing build-out target and supply incentives will mitigate pressure. The Australian

Economists and commentators warning of stronger upward pressure

• Multiple outlets quote economists (e.g., AMP’s Shane Oliver) and finance commentator Scott Pape (Barefoot Investor) warning the policy will push up prices, especially at the entry-level end, by enabling 95% LVR borrowing at scale. News.com.au

• ABC coverage ahead of today’s start highlighted concerns that lifting price caps and scrapping income caps could inflate demand faster than supply can respond. ABC

Supply constraints make near-term inflation more likely

• Reports juxtapose the scheme with weak building approvals and RBA Governor Michele Bullock’s remarks about a near-term supply shortfall, suggesting demand-side support may outpace new supply in the next 1–2 years—fuel for price growth. News.com.au

Higher-end estimates from political opponents

• The Australian Greens cite Parliamentary Library analysis estimating the scheme could add ~$55 billion to property prices over six years (an upper-bound, partisan estimate that hasn’t been publicly reproduced by Treasury). The Australian Greens

Bottom line

• Consensus across today’s coverage: prices are likely to rise, with disagreement on magnitude.

  • Government/Treasury: small uptick. The Australian

  • Independent economists/commentators: material upward pressure concentrated in starter homes and outer-suburban/regional markets targeted by the new caps. News.com.au

  • Given supply bottlenecks, the near-term (next 12–24 months) risk skews toward above-slight price impacts unless supply programs ramp quickly. The Australian

What to watch next (signals for how big the effect will be)

• Take-up rates now that places are uncapped (early surge would amplify demand). Housing Australia

• Monthly building approvals and commencements (if they don’t lift, demand will bite into prices). News.com.au

• Lender credit settings for 95% LVR loans (pricing and assessment buffers can moderate leverage). (Inferred from today’s commentary about 95% mortgages.) News.com.au

What this means for first-time property investors

While the scheme is explicitly marketed at first-home buyers, its flow-on effects are highly relevant to new entrants in property investment:

1. 1. Higher entry-level competition

      • The 5% deposit scheme is expected to increase competition for lower-value stock — the same properties many first-time investors target (apartments, townhouses, outer-suburban houses).

      • Investors may find themselves bidding against more owner-occupiers who now have access to finance with smaller deposits, which can drive prices higher in that segment.

   2. Deposit and financing contrasts

      • Importantly, the scheme is not available for investors, so they remain subject to 20% deposit requirements in most cases (to avoid LMI).

      • This creates a financing asymmetry: first-home buyers can enter with 5% down, while investors still need 4× the equity.

      • For first-time investors, this makes gearing strategies harder unless they already have substantial capital.

   3. Rental market dynamics

      • If the scheme succeeds in converting long-term renters into buyers, demand for rentals may ease slightly at the margin.

      • However, given overall supply shortages, most analysts expect continued rental stress, keeping yields relatively strong for investors who can secure properties.

   4. Short-term risk vs long-term positioning

      • In the short term, investors entering now face heightened purchase prices due to extra demand from subsidised first-home buyers.

      • Over the medium to long term, once new housing supply programs catch up, price growth may stabilise — leaving investors who bought now with compressed yields if they overpaid at entry.

   5. Strategic takeaways

      • First-time investors should consider moving upmarket (beyond the subsidised price caps) where competition may be less intense.

      • Alternatively, targeting regional markets or property types less favoured by first-home buyers (e.g., multi-dwelling investments, commercial) could offer better relative value.

      • Patience may also be wise: monitoring how quickly the scheme fuels demand versus how soon supply measures bite will shape timing decisions.

For further insights on property investment, avoiding common pitfalls and staying informed about market conditions. reach out to John Tsoulos or Frank Pennisi at IFP Advisory on (08) 8423 6176. Your investment success depends on making informed, strategic decisions.

IFP Advisory is an Accredited ASPIRE Property Advisor Network advisor and all professionals are Qualified Property Investment Advisors (QPIA). Property investing is about purchasing a property that aligns with your goals and investment strategy. You should never be sold an investment. Know your numbers! If you invest wisely and strategically, the Australian residential property market can be a rewarding venture.