What the First Home Guarantee Changes Mean for Melbourne Buyers
In This Week’s How's The Market | Edition 128
What the First Home Guarantee Changes Mean for Melbourne Buyers
“Kardinia” – Grand Three-Story Victorian with Exquisite City Views
The bigger challenge facing Australia: Building 1.2m climate-resilient homes
What the First Home Guarantee Changes Mean for Melbourne Buyers
The 5% Deposit Shift - What’s Actually Changed
From 1 October 2025, the federal government is expanding the First Home Guarantee in a few key ways:
No more income caps - previously, singles had to earn under $125,000 and couples under $200,000 to qualify. That restriction is gone.
No more place limits - instead of a set number of spots each year, the scheme will be open to anyone who meets the criteria.
Higher price caps - in Melbourne and Geelong, the maximum eligible property price lifts from $800,000 to $950,000.
Same 5% deposit, no LMI - buyers can purchase with a 5% deposit, with the government guaranteeing up to 15% of the loan, meaning no need to pay lenders mortgage insurance.
What does that look like in practice? For a $950,000 property, instead of saving a $190,000 deposit, you’d need just under $50,000. Stamp duty is still payable (around $50,000 at that price point for most buyers), but the barrier to entry is significantly reduced.
Urgency Fuels the Market
If this feels familiar, it’s because we’ve seen it before. During COVID, stamp duty concessions lit a fire under the market, with buyers pushing bids up by as little as a cent just to secure their dream home before the clock struck one million.
The same psychology is already kicking in. Buyers at $1.5M-plus are scrambling to lock in deals early, even though they’re outside the scheme’s limits. Why? Because they know what’s coming, a wave of fresh demand and price pressure.
FOMO isn’t a theory. It’s a self-fulfilling prophecy.
Where the Pressure Lands
So what actually happens when the cap shifts from $800k to $950k in Melbourne?
Not much if you’re hunting a family home in Camberwell or Hawthorn $950k won’t get you a backyard there. But villa units in those blue-chip pockets? That’s where the storm hits.
Think neat single-level units tucked in Malvern East, Glen Iris, or Surry Hills currently sitting at $850k to $900k. They’re about to jump. Fast. $50,000 gains overnight won’t be surprising.
Further out, Bayside suburbs like Mentone, Cheltenham, or Carrum are also in the firing line. With properties still hovering below $950k, expect competition to surge.
The Big Picture: Demand vs Supply
Victoria welcomed 120,000 new migrants last year. Only 60,000 new homes were built. The math doesn’t lie. More people, fewer properties. Add a government-backed scheme that slashes deposit hurdles, and you’ve got a recipe for higher prices.
Even the Treasury admits it: when demand rises and supply stays tight, prices go up.
The Trade-Off
Sure, the scheme saves buyers from the sting of Lenders Mortgage Insurance (LMI). It cuts years off saving timelines. And it finally levels the playing field for those without wealthy parents to lean on.
But let’s be real: this isn’t a free pass. Competition will intensify. Properties at or below $950k will get snapped up quicker than ever. And while first-home buyers benefit, the government still pockets millions in stamp duty.
Stay ahead of the market - get the real auction results every week!
What The Agents Are Saying
With spring traditionally the busiest selling season, agents expect strong demand to carry momentum through the months ahead.
Buyers are returning in strong numbers, encouraged by recent interest rate cuts and improved borrowing conditions.
At auctions over the last two weekends, we have seen strong bidding with 5+ bidders on multiple homes.
Melbourne’s median house price is edging closer to the $1 million mark, and competition at open homes and auctions is intensifying.
Stock levels remain tight, which is keeping conditions in favour of sellers.
Well renovated properties and properties that are moved in ready are attracting the most attention.
The Wow Factor!
8 Calvin Street, Hawthorn, Vic 3122
“Kardinia” – Grand Three-Story Victorian with Exquisite City Views
Why it WOWs:
6-bed + 5-bath mansion with rooftop deck & terraces
Panoramic CBD, MCG & Dandenong Ranges views
Chef’s kitchen with Gaggenau appliances & butler’s pantry
Multiple living zones, formal dining & entertainer’s terraces
Private landscaped gardens, 15m lap pool & sustainable features
Lift access across three grand levels, study/home office spaces
Minutes from Yarra River, top schools & elite inner-city lifestyle
Price guide :$9,000,000 - $9,900,000
In The Media
The bigger challenge facing Australia: Building 1.2m climate-resilient homes
Australia is racing to deliver 1.2 million new homes in just five years but the challenge isn’t just about speed. These homes must be climate-resilient, affordable, and built for the future.
At the recent HIA 2025 Future Homes Forum, industry leaders warned that yesterday’s building methods won’t cut it in tomorrow’s world. With bushfires, floods, heatwaves, and storms becoming more frequent, the homes we build today must protect families while helping slow climate change.
The question is: How do we build faster, safer, and smarter without pricing Australians out of the market?
Resilience vs. Affordability: Stronger, sustainable materials often cost more but cutting corners is no longer an option.
Innovation on the Rise: From low-carbon concrete to geothermal energy systems, the next wave of housing is already being tested.
Education Matters: Builders, governments, and everyday Australians all have a role to play in shaping homes that last.
As HIA’s Simon Croft put it: “We not only need to build affordable homes, but we need to build safe homes.”
And with voices like Jamie Durie showcasing what’s possible from passive design to vertical gardens Australians are being shown a glimpse of a smarter, greener future.
The takeaway? Future homes aren’t just about shelter; they're about survival, sustainability, and shaping the way we live for generations to come.
Final Thoughts
The First Home Guarantee doesn’t guarantee affordability. What it does guarantee is opportunity.
For the buyers who act fast, it could be the ticket onto the property ladder years earlier. For those who wait? Expect to see the properties you want climb out of reach before you’ve even booked your Saturday inspections.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
