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Is this one change about to trigger the biggest boom in 2026? The government has announced a first home buyer scheme like nothing before. Just a $75,000 deposit could get you into a $1. 5 million home. This could be amazing for first home buyers that get in quick.
But could this cause a boom for us property investors? I'm Junge Ma, Senior Research Analyst at InvestorKit. And in this episode, I'm going to break down the changes in each state, where it's most likely to heat up, and where it's not likely to be affected. You absolutely want to stick around for that part. And finally, how you need to be looking at this 5% first home buyer guarantee as a property investor.
Let's get into it. From October the 1st, 2025, the federal government is rolling out a new version of the 5% deposit guarantee scheme. It's much more generous than the previous versions. Key changes include, one, there's no income cap anymore, meaning that no matter how much you're earning, you're eligible to apply for this. Two, there's no limit on spots anymore.
So previously, you might need to wait for another year for new spots, and now you don't need to wait. Three, across almost all states, the maximum price you can buy a first home has been lifted. If you're listening on iTunes or Spotify, head to our YouTube channel, and you see this table listing all the changes across all states on the screen. Some big improvements include, in Sydney and big regional cities in New South Wales, the maximum price has increased from $900,000 to $1. 5 million, and that is Sydney's current median house price.
In Melbourne and Geelong, the maximum price has increased from $800,000 to $950,000. That is even higher than Melbourne's median house price. In Brisbane and the surrounding regional hubs, including Toowoomba, that threshold has increased from $700,000 to $1 million. So will this updated scheme lead to a boom in 2026? To find out that, we can look back into the history.
On the screen now, I'm showing you this chart overlapping several things. One is the RBA cash rate trend over 20 years from 2003 to 2022. Two is Australia's median house price over the same time, approximately. And three is new home loan value divided by buyer types, including ordinary owner-occupiers, investors, and first home buyers. There were three instances where a new first home buyer assistance policy increased the number and value of first home buyer loans over the 20 years.
The first time was in 2008 when the first home owner grant boost was introduced. The second time was in 2007 when New South Wales and Victoria introduced their broad first home buyer stamp duty exemption and concession scheme. And the first time was in 2020 when the federal government expanded new home guarantee and then New South Wales lifted their first home buyer stamp duty threshold. At the same time, Victoria introduced a land transfer duty waiver for purchases up to $1 million. After these policy changes, we can always see a surge in first home buyer activity.
But what happened to the house prices at the same time? From 2008 to 2009, although first home buyer activity was surging, Australia's median house price was actually declining because of the impact of the global financial crisis. It was only when the cash rate dropped to a much lower level, ordinary owner-occupiers and investors' numbers increased that the house prices were boosted and surged. Then in 2017, house prices at the time were already on the way up and the introduction of those policies and the increase in first home buyer activity didn't make much change to the house price growth rate. In 2020, many things were happening.
First home buyer activity was increasing, but at the same time, owner-occupier activity was surging. Same as investors' activity. And also overlapped with that, our interest rates dropped to the historically low level. So all four factors were contributing to the surge in house prices. It's really hard to tell which factor was the dominant one.
And based on how small of a share first home buyers are in the total number of all home buyers, I believe the influence of their activity increase wasn't the biggest driver. So based on our observation of what happened in the history, it is unlikely that this time this policy change will lead to any significant price boom in 2026. However, whether there will be a boom or not, some markets will be affected more than the others. Two markets that can be more responsive to this policy change are one, our outer ring growth corridor areas in the biggest cities, such as Sydney, Melbourne, and Brisbane. And the second type would be large regional hubs, for example, Newcastle, Geelong, or Gold Coast.
These markets, they are first very attractive to first home buyers because their prices are relatively affordable compared to many inner ring or middle ring suburbs. And two, their house prices are actually between the old price cap and the current price cap. So the policy changes are most likely boost first home buyer demand in these areas the most. I'll give you some examples as well for the outer ring growth corridors. In Sydney, we have areas like Blacktown North or Campbelltown.
Blacktown North, the median house price now is 1. 3 million, well below the 1. 5 million cap, and it's full of first home buyers. Another place is Campbelltown, also a first home buyer hotspot. The current median house price is 940,000, also well below the new cap.
In Melbourne, we're looking at Wyndham in the west and Casey South in the east. Wyndham West, the median house price now is 660,000. Casey South, the median house price is 730,000. In Brisbane, we're looking at Ipswich Inner and Springfield Red Bank area. Ipswich Inner, the median house price is 750,000.
Springfield Red Bank, 795,000. And now in the regions, Newcastle's median house price is 930,000 for now. Geelong, 675,000. In Gold Coast, the most popular areas' median house price might have already exceeded the price cap a lot, but growth corridors like Ormew and Oxenford, median house price is still just around 1. 1 million.
If you look at smaller homes, you can easily get something well within the price cap of 1 million. And Toowoomba, surprisingly, is also having the new price cap of 1 million. And now the median house price there is just 700,000, well below the new price cap. That must be very attractive for first home buyers. Now, on the other hand, there are places that won't be affected too much.
The first type of markets is the already affordable one. Even before the cap adjustment, their median house prices or house prices in general were already below the price cap. So the adjustment of the cap won't make too much difference for these areas. Some examples are North Queensland, regional Western Australia, or regional South Australia. And the second type of markets that won't be affected too much would be the ultra premium locations.
Their house prices are way above of the new cap. We're talking about three, four, five, or even more millions. These areas are never popular within first home buyers. So what's happening for the first home buyer won't make much difference to the demand for these locations. Now that we know that one, the changes in this 5% deposit guarantee scheme won't likely cause a boom in 2026.
And two, there will be places or locations being more responsive to this change and there will be places or markets not being affected much by these changes. So what can we do as investors? In my opinion, that's a great signal telling us that we still need to make decisions based on what we need instead of a fear of missing out. So before you rush in, ask yourself, for my next purchase, do I need it in a market that will be affected by this scheme change or not? If yes, am I financially ready to make the purchase and move fast before the markets heat up?
If not, do I have a plan on when and where I want to do my next purchase? Once you have the answers clearly in mind, your next purchase will be a great purchase, a profitable one, no matter if you're riding this momentum, this trend or not. So in summary, this 5% deposit scheme is going to have some effect on the market, but an Australia-wide boom, the data doesn't support it happening. But it doesn't mean we're not seeing any price growth. Looking into these areas that I've discussed in this episode, and if you know a first home buyer, share this video with them and make sure they get into the market before prices start to rise.
If they want to buy in those areas, that will be affected by this policy change. And for you as a property investor, don't pay attention to the headlines the same way. Let the data guide your decisions. Have an understanding of schemes like this, but don't let them push you to make formal decisions. I'm Junge Ma, Senior Research Analyst at InvestorKit.
I'll see you in the next episode.
