👉 Background: In 2022, the Federal Government announced the First Home Buyer Guarantee scheme for the very first time. It allowed eligible first-home buyers to purchase a home with as little as a 5% deposit, with 50,000 places offered each financial year. As part of the election in May, the Labor government went haaaard on a new, expanded offer for first home buyers, promising that by 2026, it would offer a new First Home Buyer Guarantee.

‍👉 What happened: While the expanded scheme was meant to be launched in 2026, the government has now brought this forward to October this year. And around 70,000 first home buyers are expected to use the scheme in its first year alone.

‍👉 What else: While this may help more Aussies get into the market, economists warn it could push up property prices even further for houses within the property cap.

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‍What's the key learning?

‍💡Housing affordability debates often come back to a key tension: demand-side policies versus supply-side policies. In the short-term, these demand-side policies, like First Home Buyer Guarantee schemes feel like a relief for buyers, but it also increases competition in the market, which can push prices higher.

💡The government have plans to grow the supply side too, including building 100,000 new houses. But, they anticipate it will take 8 years to get to this number due to rezoning, getting council approvals and then actually building the houses.

💡While the government anticipate that this policy will increase property prices by 0.5% over six years, SQM Research believe that this policy could lead to a more than 15% increase in house prices over a six-year period... on top of the annual growth of the property market. So while the First Home Buyer Guarantee gets people into the market faster, it may contribute to the affordability pressures that it is trying to fix.