‘Shaking it Up’ - First Home buyers are about to flood the market… but at what cost?

OPINION — Over the past couple of months, we’ve been watching the auction market with growing curiosity. Traditionally with the beginning of spring brings a  surge of first home buyer (FHB) activity.  Excited young couples, families, and professionals all vying for that first special slice of the property ladder. But this year has felt different. FHBs have been conspicuously absent, holding their cards close and waiting for October 1st.

And when you look at what’s about to change, you can see why. 

A Reform That Will Change Everything 

From October, the federal government’s First Home Buyers Guarantee gets a dramatic facelift. Buyers will only need a 5% deposit, with the government stepping in to guarantee up to 15% of the property’s value. That means no Lender’s Mortgage Insurance (LMI) — a saving that, for some buyers, amounts to tens of thousands of dollars. 

On top of that, income caps and scheme place limits are being scrapped, and the price ceiling in NSW has shot up from $900,000 to $1.5 million. That’s not just a small tweak — that’s a game-changer. A buyer who once had to settle for a $900,000 budget can now realistically chase homes worth $1.2 to $1.5 million without the drag of LMI weighing them down. 

The Incoming Wave 

It’s no wonder FHBs have been holding off. Why bid now when, in a matter of weeks, you can stretch your borrowing capacity further and eliminate one of the biggest upfront costs? The consequence, however, is obvious: come October, we’re pretty much guaranteed  to see a wave of FHBs flooding the market, pushing up demand — and with it, property prices. 

For current homeowners in this bracket, that’s fantastic news.  Your investment may soon be worth considerably more. But for the FHBs themselves, the story is more complicated. The very scheme designed to help them get in will also drive up competition, forcing them to pay premiums to secure the homes they want. 

Suburbs on the Move 

We don’t have to speculate to see where this is heading. Some suburbs are already galloping ahead. Mount Pritchard, Kingswood, and Wentworthville have all climbed 20% or more in just 12 months. These aren’t prestige postcodes — they’re traditional FHB territory. And with the new cap extending all the way to $1.5 million, these markets will only heat up further. 

So while the scheme is meant to make housing more accessible, it could just as easily turbocharge price growth in exactly the areas where buyers need help the most. 

A Double-Edged Sword 

Here’s the dilemma: on one hand buyers should welcome the government’s reforms. Reducing the deposit barrier to 5% and eliminating LMI are sensible ways to help people break into the market earlier. But property in Australia has always been about supply and demand. Unless we can increase housing supply at the same time, boosting borrowing power simply fuels price inflation. 

Yes, more Australians will technically “qualify” for the property ladder after October. But they may find the rungs just a little further apart than they expected. 

The Fox Take 

As someone who has been observing and experiencing these shifts closely, I believe the new scheme will fulfill promises and create further pitfalls. It will help thousands more buyers take the plunge, but it will also ratchet up competition, particularly in Western Sydney’s middle-ring suburbs. 

If you’re a first home buyer, you’ll need to be sharper, quicker, and more strategic than ever. If you’re already an owner, congratulations, the tide is in your favour. 

But let’s not kid ourselves: unless real action is taken on the supply side, these reforms could end up being less about helping first home buyers and more about driving the next surge in property prices.