First-Home Buyer Schemes Ease Deposits, But Supply Crunch Keeps Dreams Out of Reach

The Albanese government has doubled down on its pledge to help younger Australians break into the housing market, with schemes like the First Home Guarantee and Help-to-Buy offering pathways for buyers with smaller deposits. But while the policies are popular, experts warn they risk inflating demand in a market where supply is already badly lagging.

How the Schemes Work

• First Home Guarantee allows buyers to enter the market with as little as 5 percent deposit, with the government acting as guarantor for the remaining 15 percent to avoid lender’s mortgage insurance.
• Help-to-Buy is a shared-equity model, where the Commonwealth can co-purchase up to 40 percent of a property, reducing the upfront burden for buyers.

Both initiatives aim to cut the time it takes to save for a deposit, which has blown out to around 10.6 years for a median-income household in today’s market.¹

The Problem: Demand Without Supply

While attractive for individuals, critics argue these schemes act like “sugar hits” for the market. They give buyers extra purchasing power but don’t add to the actual stock of homes available.

• Housing completions were 177,000 in 2024, well below the 223,000 needed annually.^{2 5}
• The National Housing Accord’s target of 1.2 million homes by 2029 is already falling behind, with Treasury forecasting a shortfall of at least 260,000 dwellings.³

With too few homes, every extra buyer in the market intensifies competition and pushes prices up.

Winners and Losers

• Winners: First-home buyers with stable incomes who can enter the market sooner. For some, these schemes make the difference between renting for another decade and buying a modest home.
• Losers: Buyers who don’t qualify or miss out on limited scheme places. With demand stoked, affordability for the broader market can worsen.

Economist Greg Jericho has noted that twenty-five years of demand-boosting housing policies in Australia have done little to improve affordability, but much to inflate prices.⁴

What Experts Say Is Missing

Housing specialists argue that unless paired with supply-side reforms, schemes like Help-to-Buy risk being short-term fixes. Needed changes include:

• Faster planning approvals at state and local levels.
• Incentives for medium-density development in well-located areas.
• Investment in public and social housing stock to relieve pressure at the bottom of the market.
• Tax reform to shift incentives away from speculative investment and toward efficient use of existing housing.

The Takeaway

First-home buyer deposit schemes are popular and politically appealing, they offer an immediate story of young Australians getting the keys to their first homes. But as long as supply lags behind demand, the schemes are unlikely to shift the affordability dial at scale.

Without a broader housing reset, these buyers may win a battle while Australia continues to lose the war on housing affordability.

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¹ “‘10.6 Years’: Dire Reality for Aussies Revealed in State of Housing System Report,” News.com.au, August 20, 2025, https://www.news.com.au/finance/real-estate/buying/106-years-dire-reality-for-aussies-revealed-in-state-of-housing-system-report/news-story/9bdb68cf61ae1704749df2c84d4f718c.

² “The Statistics Behind Labor’s Housing Challenge,” ABC News, August 25, 2025, https://www.abc.net.au/news/2025-08-25/statistics-behind-labors-housing-challenge/105694204.

³ Jacob Greber, “The 262,000 Home Shortage Australia Needs to Fix,” Australian Financial Review, May 16, 2025, https://www.afr.com/property/residential/the-262-000-home-shortage-australia-needs-to-fix-20250516-p5lzv8.

⁴ Greg Jericho, “After 25 Years of the Same Housing Policies Pushing Up Demand, Australia Needs a New Approach,” The Guardian, April 17, 2025, https://www.theguardian.com/business/grogonomics/2025/apr/17/after-25-years-of-the-same-housing-policies-pushing-up-demand-australia-needs-a-new-approach.

⁵ Henry Zwartz, “Government’s First Homebuyers Deposit Scheme Could Increase Prices Faster than Treasury Forecasts,” ABC News, August 25, 2025, https://www.abc.net.au/news/2025-08-25/statistics-behind-labors-housing-challenge/105694204.