Government Expands Home Guarantee Scheme Amid Affordability Concerns

Starting October 1, 2025, the federal government will introduce major changes to the Home Guarantee Scheme in an effort to widen access to the housing market. The program, originally designed to help first-home buyers purchase a property with a smaller deposit, will now remove income limits, increase property price caps, and eliminate annual quotas.

In Sydney, for instance, the purchase price threshold will climb to $1.5 million, while in Melbourne and Brisbane, the cap will rise to $1 million. Other cities and regional areas will also see significant increases. The removal of income eligibility thresholds means higher-earning Australians will now be able to access the scheme, effectively broadening the buyer pool.

The government argues that these changes will create new opportunities for households struggling to enter a market where affordability remains at record lows. Prime Minister Anthony Albanese has emphasised that bringing the launch forward by three months reflects his administration’s commitment to helping younger Australians into homeownership sooner.¹

However, analysts have raised red flags about the risks of expanding access without addressing the underlying shortage of housing supply. Critics warn that by enabling more people to bid for a limited number of homes, the scheme may intensify competition, drive prices higher, and place buyers in financially vulnerable positions if market conditions shift.²

Research also shows that while the scheme helps buyers reduce the size of their deposit, sometimes shaving years off the savings process, it could inadvertently funnel demand into already overheated markets, such as Sydney and Melbourne.³ Economists point out that the program does little to fix long-standing structural problems, such as low construction levels and the concentration of demand in capital cities. With affordability already at its weakest in decades, the risk of financial stress for buyers remains a serious concern.⁴

The coming months will reveal whether the expanded scheme delivers the intended boost to housing access or whether it risks amplifying financial pressures in an already strained property market.

¹ Anthony Albanese, “Albanese Government Delivers 5% Deposits for All First Home Buyers Sooner,” Prime Minister of Australia, August 25, 2025. https://www.pm.gov.au/media/albanese-government-delivers-5-deposits-all-first-home-buyers-sooner.

² Clancy Yeates, “Home Guarantee Scheme Changes May Put Property Market, First-Home Buyers at Risk,” The Australian, September 4, 2025. https://www.theaustralian.com.au/wealth/property-investing/why-government-help-may-be-setting-up-firsthome-buyers-for-failure/news-story/eafd0a9cd9949a069085be8b3cfd6202.

³ Elizabeth Henson, “How Much You’ll Need for a Five Per Cent Deposit in Every Australian Suburb and Town,” The Advertiser (AdelaideNow), September 3, 2025. https://www.adelaidenow.com.au/real-estate/south-australia/adelaide/how-much-youll-need-for-a-five-per-cent-deposit-in-every-australian-suburb-and-town-after-the-governments-changes-to-the-first-home-guarantee-come-in/news-story/6ccb7c30a1b123c400e4320e5c6e6c8b.

⁴ ABC News, “5 Per Cent Home Deposit Scheme to Begin in October,” ABC News, August 25, 2025. https://www.abc.net.au/news/2025-08-25/5-per-cent-home-deposit-scheme-to-begin-in-october/105691434.