Surging House Prices Challenge Australian First-Time Buyers

0

Westpac's latest consumer sentiment survey confirms the upswing in property market confidence, with expectations of higher house prices and an improving sentiment that it’s a good time to purchase a home. CBA Associate Economist Lucinda Jerogin observes that since the RBA’s rate reductions started in February, lower-priced homes have appreciated faster—increasing by 4% compared to a 3% rise for higher-priced properties. This trend reversal highlights ongoing affordability issues, reducing purchasing power and directing more buyers towards affordable housing options.

Competition for budget-friendly homes is intensifying due to robust demand and limited supply, driving prices upward in this segment. The introduction of the Albanese government's 5% deposit scheme for first-time buyers, effective from 1 January 2026, is set to further bolster demand. Under this scheme, the government will guarantee 15% of the mortgage, allowing buyers to enter the market with only a 5% deposit and avoiding lenders’ mortgage insurance.

While this initiative aims to support first-time buyers, there is concern it may inadvertently increase property prices by heightening competition for entry-level homes, pushing purchase costs higher. The growing market pressures suggest that future buyers may face larger mortgage debts despite the scheme's potential to enhance initial housing affordability.

As demand-side measures like these continue to shape the market, the sector's ability to sustainably absorb and benefit first-time buyers remains a central concern, amid speculation that these policies might ultimately counteract affordability goals.

Published:Wednesday, 6th Aug 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

Australian Housing Market Faces Affordability Challenges Despite Rate Cuts 19 Aug 2025: Paige Estritori At the close of 2024, Cotality, the company formerly known as CoreLogic, reported that both the national dwelling value to income ratio and the income percentage needed for a new mortgage hit unprecedented highs. According to Cotality's housing report for July, the median dwelling value in Australia's capital cities was $926,854. Sydney and Brisbane, with median values of $1,228,435 and $934,623, respectively, were noted as the most expensive markets, reflecting impressive growth over the past five years. - read more

Call for Red Tape Reduction Gains Momentum in Australian Financial Sector 19 Aug 2025: Paige Estritori The Insurance Council of Australia (ICA) has aligned with a coalition of business groups urging the government to cut red tape ahead of the Economic Reform Roundtable hosted by Treasurer Jim Chalmers. The 27-member strong alliance is pushing for reforms that focus on increasing investment, fostering innovation, reducing red tape by 25% by 2030, and enhancing major project approvals. Additionally, they are advocating for tax reforms that won't adversely impact consumer or business costs. - read more

RBA Rate Cut Spurs Property Market Surge 18 Aug 2025: Paige Estritori Last week, the Reserve Bank of Australia (RBA) made its third rate cut this year, lowering the official cash rate by 0.25% to 3.60%. Historically, such rate reductions have been linked to a significant rise in Australian home values, with double-digit growth expected within two years of the start of a rate-cutting cycle, according to the Australian Financial Review. - read more

BFG Faces 44% Profit Decline Amid Strategic Transformation 15 Aug 2025: Paige Estritori In a recent financial disclosure, Bell Financial Group (BFG) announced a notable 44% drop in half-year net profit after tax as it navigates challenging market conditions. While the company's overall revenue declined by 12.5% to $121.5 million, its Technology & Platforms and Products & Services units showed resilience with a combined revenue increase of 12% to $46.3 million. This contrasts sharply with the 23.5% revenue dip in its broking division, which totalled $69.4 million. - read more

Self-Directed Investors Urged to Assume Greater Responsibility  14 Aug 2025: Paige Estritori The evolving landscape of private credit funds in Australia necessitates greater responsibility from self-directed investors, according to Darren Connolly, the Chief Executive of Investment Markets. As the landscape of fixed income investments becomes increasingly complex, investors are being urged to take ownership of their decision-making processes. - read more

Reserves Bank's Rate Cuts: Impact on Australian Housing Affordability 14 Aug 2025: Paige Estritori The Reserve Bank of Australia (RBA) recently made a pivotal decision to cut the official cash rate (OCR) by 0.25%, bringing it down to 3.60%. This move marks a total reduction of 0.75% from its peak of 4.35%. Economists and financial markets anticipate further cuts, potentially two more by mid-2026, reflecting a cautious easing policy by the RBA. - read more

Costly Glitches Plague Fee Disclosure Under New DBFO Legislation 13 Aug 2025: Paige Estritori As financial planners await forthcoming updates to the Delivering Better Financial Outcomes (DBFO) legislation, many are grappling with significant challenges arising from the first tranche, specifically concerning fee consent requirements. These issues, unfortunately, seem to require legislative amendments as they fall outside the scope of regulatory fixes, amplifying the compliance burden on financial advisers, especially regarding breach reporting. - read more

RBA's Rate Cut Strategy Sparks Industry Debate on Future Moves 13 Aug 2025: Paige Estritori The Reserve Bank of Australia (RBA) has recently initiated a 0.25% cut to the official cash rate, stirring dialogue among industry leaders about the timing and necessity of potential future cuts. Despite the reduction aligning with broad expectations, there are diverging opinions about further reductions this year. - read more

Opportunities for Serving the Mass Affluent Market in Financial Advice 12 Aug 2025: Paige Estritori Charlie Viola, executive chairman of Viola Private Wealth, recently highlighted a promising opportunity for financial institutions to better serve the mass affluent market. Despite the recent trends stemming from the royal commission that have seen personnel changes across the financial advisory sector, Viola asserts that there remains a strong clientele base. The financial advisory business, he notes, benefits from a steady stream of increasingly wealthy individuals, but the challenge lies in effectively serving those with moderate wealth. - read more