What First Home Buyers in Australia Need to Know in 2025

For many first home buyers in Australia, 2025 has brought both opportunity and challenge in the property market. Federal housing initiatives, lower interest rates and growth in regional areas are helping more people consider their first step into ownership. At the same time, rising property prices, capped program places and the complexities of shared-equity arrangements mean that entering the market remains a competitive and sometimes difficult process.

Government Support: A welcome but limited pathway

The federal government continues to play a big role in helping people buy their first home. The First Home Guarantee lets eligible buyers purchase with only a 5% deposit and no lenders mortgage insurance, with 50,000 spots available this year. Later in 2025, the Help to Buy scheme is expected to launch, allowing purchases with just a 2% deposit, while the government takes a share of up to 40% in new homes or 30% in existing ones. These schemes can make a real difference, especially for those struggling to save a large deposit. But there are limits: places are capped, eligibility rules are strict, and in the case of shared equity, buyers won’t fully own their home. That means future refinancing, or the sale of the property, could be more complicated. For many, these programs are best seen as stepping stones into the market rather than permanent arrangements.

From 1 October 2025, big changes are coming. The First Home Guarantee will expand with no place or income limits, higher property price caps, and simpler access for regional areas. This means more first home buyers can secure a loan with just a 5% deposit and avoid lenders mortgage insurance, in some locations, even up to a $1.5 million purchase price. According to Housing Australia (read more here), these updates will dramatically widen eligibility and access to various property stock types.

Importantly, buyers should also check what specific first home buyer grants and schemes are available at State level. In many cases, state and federal grants can be combined. This “stacking” approach can increase the overall dollar value of assistance, making it easier to buy, though it may limit the types of properties eligible (for example, in Queensland, combining grants often applies only to new builds). For first home buyers who meet the criteria, this combination can be a powerful way to enter the market sooner.

Market Conditions: Growth and affordability

Still, not all markets tell the same story. Outer-metropolitan areas and regional centres are proving more affordable, often within government scheme limits, and many of these areas are backed by new transport links, schools and lifestyle developments. The trade-off is that affordability sometimes comes with longer commutes or fewer inner-city conveniences.

Interest Rates: A relief and a risk

In August 2025, the Reserve Bank cut the cash rate to 3.60%. This means buyers can access a slightly higher borrowing amount and current home mortgage owners have some relief in their monthly repayment. Combined, this is welcome news for anyone looking to enter the market.

The flip side is that cheaper borrowing encourages more buyers. Increased demand can put pressure on prices, meaning that while loans may cost less each month, the price of homes may edge higher over time.

It’s worth remembering, though, that cash rate changes don’t always translate directly for first home buyers. Serviceability rules mean banks may offer higher interest rates depending on your circumstances, and advertised rates don’t always match what you’ll actually be offered.

Further, banks can still determine their own interest rate movements, regardless of whether the Reserve Bank of Australia (RBA) decides to cut or increase cash rates. While it’s smart to keep an eye on cash rates, buyers should focus on their personal borrowing capacity and serviceability, and shop around with the help of a mortgage broker to secure the best deal.

Supply and Choice: Not All Areas Are Equal

Another challenge lies in finding suitable properties. Growth corridors and regional hubs often have new homes that fit comfortably within a government scheme’s property price cap criteria. Established inner suburbs, by contrast, tend to have fewer eligible listings, which means buyers face greater competition.

Flexibility is key. Those open to different suburbs or property types are usually in a stronger position to find something within budget, while still meeting long-term needs.

What first home buyers can do in 2025

In the early stages of buying your first home, preparation can be the key that unlocks opportunity. First home buyers in 2025 should think about:

• Getting pre-approval early so you know your budget and can act quickly when the right property comes up.
• Researching growth areas particularly in metro-fringe and regional hubs, where affordability and lifestyle options often combine.
• Acting quickly but carefully, since government scheme places are capped and competition can be fierce.
• Viewing the first home as a stepping stone, building equity that can later be used to upgrade.

The bottom line

2025 is not a golden ticket into the housing market, nor is it a year to sit back and wait. It is a year of balance and making the most out of key opportunities. Government programs and lower interest rates create genuine opportunities, but rising prices, limited scheme spots and uneven stock availability mean buyers need to be realistic.

For those who prepare well, stay flexible about where and what they buy, and keep the bigger picture in mind, this year could be the right moment to make the jump into ownership. The first home may not be the dream home, but it can be the beginning of a long-term property journey.

Our teams are ready and waiting to guide you along your first home buyer journey. Find your closest PRD office here.