Why 2025 Is (Still) A Smart Time to Buy Your First Home in Australia
If you’ve been waiting for the “right moment” to get into the market, 2025 has delivered a rare combo: steadier interest rates, bigger government support for first-home buyers, and a market that’s rising but still offering windows of value if you’re prepared. Here’s what’s changed, what it means for you, and how to move from scrolling listings to getting the keys.
1) Interest rates have steadied – so you can plan with more confidence
The Reserve Bank of Australia kept the cash rate on hold at 3.60% at its November meeting. After a few cuts earlier in the year, policy has settled, and markets expect any further changes to be gradual. For first-home buyers, fewer surprises from the RBA means clearer budgeting, more predictable pre-approvals, and an easier time comparing fixed versus variable options.
Why it matters: Lenders price many products off the cash rate and wholesale funding costs. A stable rate environment reduces the risk your borrowing power suddenly lurches lower mid-search, and it helps you lock a strategy (e.g., part-fixed for certainty, part-variable for flexibility).
2) The Home Guarantee Scheme just got a massive upgrade
From 1 October 2025, the federal Home Guarantee Scheme (which includes the First Home Guarantee) expanded in a big way. Unlimited places and higher property price caps. That means more buyers can purchase with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI), because the government guarantees up to 15% of the property value. For many, that’s tens of thousands of dollars saved and months (or years) shaved off deposit saving.
Why it matters: In competitive markets, getting out of the rent cycle sooner often beats trying to “save the perfect deposit” while prices climb around you.
3) Shared-equity “Help to Buy” can reduce your upfront and ongoing costs
The Commonwealth’s Help to Buy shared-equity program (30–40% equity contribution depending on property type, subject to eligibility and caps) is being funded and phased in, giving qualified buyers another pathway to lower repayments and deposits. It’s not for everyone, as you co-own with government and settle up when you sell or refinance, but for the right buyer it can be a powerful leg-up.
Why it matters: Lowering the loan size reduces interest paid and can broaden your choice of suburbs while you’re early in your career.
4) Stamp duty relief is real – check your state
State transfer-duty (stamp duty) concessions and exemptions for first-home buyers meaningfully cut upfront cash. For example:
-
Victoria: first-home buyer duty exemption/concession up to $750,000 (contract conditions apply).
-
NSW: First Home Buyers Assistance Scheme offers full or partial transfer-duty relief within set thresholds.
Why it matters: Reducing day-one costs keeps more of your savings for buffers, furnishings, or minor renos and can lift what you can comfortably afford.
5) Prices are rising, waiting could cost more than buying
After a slower 2024, 2025 has seen momentum return. PropTrack’s October 2025 Home Price Index shows national prices up 0.6% for the month and 7.5% over the year, with values sitting at record highs. Multiple capitals are leading gains, and tight supply continues to support prices.
Why it matters: If prices keep trending up while you save, the goalposts can move faster than your deposit grows. With expanded guarantees and concessions, the balance often tips toward “buy the right home sooner” rather than “wait for the perfect time”.
“Should I worry about buying at a peak?”
Healthy caution is good. Here’s how first-home buyers can protect themselves, and still move forward:
-
Stress-test your repayments. Model your budget at rates 1–1.5 percentage points higher than today. We can build this scenario into your pre-approval so you know your limits before bidding. (RBA has flagged a cautious stance as inflation normalises, but stability, not rapid cuts, is the theme.)
-
Focus on fundamentals. Prioritise locations with diverse employment, good transport, and amenity. Rising rents (and low vacancy) support owner-occupier demand over time, which helps underpin values.
-
Buy for the next 5–7 years. Transaction costs (stamp duty, legals) mean property works best with a medium-term horizon.
-
Leave a buffer. Keep 3–6 months of expenses after settlement. That’s easier when you avoid LMI via the First Home Guarantee.
What this means in practice
Case study: A $700,000 purchase in Melbourne as a first-home buyer.
-
Deposit: $35,000 (5%) using the First Home Guarantee → No LMI (potential saving often ~$20k–$30k vs standard LMI on low-deposit loans, lender-dependent).
-
Stamp duty: Potential first-home buyer duty concession/exemption depending on contract date and eligibility.
-
Rate choice: Compare fixed, variable, or split while RBA holds at 3.60% – we’ll model repayments and buffers under each.
Result: lower upfront cash, manageable repayments with headroom, and you’re in the market while prices trend higher.
How MKS Lending helps first-home buyers win
-
Eligibility check in one go. We confirm your fit for the Home Guarantee Scheme, Help to Buy (if applicable), and your state’s duty relief, then structure your application to maximise savings.
-
Pre-approval that actually works on auction day. We map lender policies (including credit-score nuances and property restrictions) so you can bid confidently.
-
Strategy on rates. We’ll stress-test at higher rates, model fixed/variable/split options, and set up a repayment buffer from day one given the RBA’s cautious tone.
-
Negotiation edge. If you’re buying private treaty, we help your agent understand your funding path (e.g., guarantee approval), which can strengthen your offer beyond just the price.
Your first 5 steps (start this week)
-
Get your borrowing power & pre-approval. We’ll factor in guarantees and shared-equity options to reduce deposit and LMI.
-
Build a suburb shortlist with data. Track days-on-market and recent sales, then reality-check against your budget.
-
Run a rate and repayment plan. Choose fixed, variable, or split; set a buffer that survives “what-ifs”.
-
Line up your conveyancer and building/pest inspector. Move fast when the right property appears.
-
Know your auction (or offer) rules. Conditions, deposits, cooling-off.
Bottom line
Between stabler rates, expanded federal support (unlimited places under the Home Guarantee Scheme), and ongoing price momentum, 2025 is giving first-home buyers practical pathways to get in sooner and smarter. If you’re ready to turn your deposit into a home, MKS Lending can map the route, unlock the right incentives, and negotiate the lending piece so you can focus on finding your place.
Click here, fill in your details and we’ll get in touch!
General advice only. Eligibility, thresholds and policies change; always check the latest program rules and state revenue guidance before you buy.