The federal government is fast-tracking its First Home Guarantee scheme, allowing buyers to purchase with a 5% deposit and no lenders mortgage insurance. Income caps are gone, and property limits have jumped to $1.5m in Sydney, $950k in Melbourne, and $1m in Brisbane.
While this offers broader access, Rodney McLoughlin highlights a critical risk: without more housing supply, buyer demand could drive prices higher. Past schemes have had similar outcomes, and experts caution this may repeat.
📈 The Rental Squeeze Tightens
Rents are surging nationwide, making it harder for Australians to save a deposit.
- Sydney one-bed unit: $675 per week (up from $470 a decade ago)
- Melbourne: $495 per week (up from $330)
- Brisbane: $530 per week (up from $325)
- Perth: $542.50 per week (up from $325)
Domain data shows renters are under increasing strain, with many turning to family support or delaying ownership goals. Rodney McLoughlin notes this trend will likely push more renters into the buying pool, further intensifying competition.
🏗️ New Supply: Sydney’s Eastern Suburbs Plans
The NSW Government has announced a new Woollahra train station and up to 10,000 new homes in Sydney’s east by 2029. While some residents resist higher density, planners argue this could be a game-changing supply boost near jobs and transport.
Community pushback is expected, but if delivered, such projects could help balance the demand surge caused by government buyer support programs.
🏠 Can Buyers Really Afford It?
Despite higher purchase caps, most average-income buyers will struggle to borrow enough.
- In Sydney, a worker on the average wage can borrow about $560k, leaving them hundreds of thousands short of a $1.5m home.
- Even couples may find themselves priced out of the scheme’s top tier.
As Rodney McLoughlin advises, buyers should be realistic about borrowing power, avoid overstretching, and carefully weigh the risks of 95% mortgages before committing.
🔑 Rodney’s Take
The expanded First Home Guarantee is a bold move, but its success hinges on boosting supply alongside demand. Without more housing, affordability pressures will remain. Buyers should proceed with caution, plan for long-term repayments, and seek professional guidance before making the leap.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 29 August 2025.
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
