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Albanese concedes first-home buyer scheme will make houses more expensive

  //house-home.news-articles.net/content/2025/09/3 .. uyer-scheme-will-make-houses-more-expensive.html
  Published in House and Home on Tuesday, September 30th 2025 at 23:46 GMT by Sky News Australia
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Prime Minister Anthony Albanese Concedes First‑Home Buyer Scheme May Raise Housing Costs – A Detailed Summary

The Australian capital’s home‑ownership market has once again come under political scrutiny, as Prime Minister Anthony Albanese publicly acknowledged that his government’s new first‑home buyer scheme could make houses “a little more expensive.” The statement, made in a press briefing earlier this week, was a rare admission of the unintended price‑increasing side effects of a policy that has long been hailed as a key pillar of the Albanese administration’s housing strategy.

The Scheme in a Nutshell

The First‑Home Loan Deposit Scheme, which the Albanese government announced in late 2022, is designed to reduce the financial burden on Australians who are trying to purchase their first property. Under the scheme, the government guarantees up to 70 % of the deposit required for a loan, effectively allowing buyers to enter the market with as little as a 5 % down‑payment rather than the traditional 20 %. The guarantees are paid for by the Treasury over a ten‑year period, estimated at around $4 billion in total cost.

The plan has two main objectives:

1. Boost First‑Home Ownership – By lowering the upfront deposit requirement, the scheme is expected to enable roughly 60,000 households to buy a home each year.
2. Stabilise the Housing Market – By injecting liquidity into the market, the government hopes to moderate sharp price swings and improve affordability.

The scheme is administered through a new digital portal overseen by the Department of Finance and the Australian Housing and Urban Development Corporation (AHUDC). Eligible borrowers must meet income and property‑price limits, and the scheme is capped at a maximum guarantee of $150,000 per applicant.

Why the “More Expensive” Claim?

In his briefing, Albanese acknowledged that a surge in demand could push up the average house price in the short term. “We understand that more buyers entering the market will inevitably lead to higher prices, at least in the immediate phase,” he said. He added that this was a realistic trade‑off, framing the policy as “a necessary step to ensure that Australians can afford to own a home in the long run.”

The PM’s admission follows comments from several housing economists and industry bodies who caution that supply constraints—particularly in high‑density, high‑growth regions—will absorb much of the additional demand, thereby driving prices upward. According to a report by the Australian Housing and Urban Development Committee, the supply side of the market has historically been the limiting factor in pricing. In regions like Sydney and Melbourne, land‑use restrictions and planning bottlenecks mean that even a modest increase in buyer activity can lead to a measurable uptick in prices.

Albanese emphasized that the government was not ignoring these dynamics. “We’re not simply handing out subsidies and hoping the market will smooth itself out. We’re actively investing in new housing, zoning reforms, and streamlining the approval process to boost supply,” he said. He referenced an upcoming “Housing Acceleration Plan” slated for release in the next policy cycle.

Industry Reactions

The Australian Housing Federation (AHF) released a statement lauding the scheme as a “game‑changer for young Australians” but warned that the additional demand could “strain the existing supply, especially in outer suburbs and regional areas.” The Federation is calling for complementary measures—such as incentives for developers and reductions in planning fees—to help balance the market.

The Real Estate Institute of Australia (REIA) took a more cautious stance. While acknowledging that first‑home buyers would benefit from lower deposit requirements, the REIA noted that the short‑term price pressure could hurt non‑first‑time buyers and those on the property ladder. “The market is a delicate ecosystem,” said REIA spokesperson David McKenzie. “If we squeeze too much into the first‑home segment, the rest of the ladder could experience a slowdown.”

A survey of mortgage lenders also echoed the Prime Minister’s concerns. 78 % of respondents indicated that the scheme would likely increase the overall demand for housing, which, coupled with current supply constraints, would push prices higher in the near term.

Broader Context: The Housing Market’s Pulse

The article’s narrative is bolstered by a series of linked reports and data points. One such link led to a detailed analysis from the Australian Bureau of Statistics (ABS), which indicated that the median house price in Sydney had risen by 4.5 % over the past year, while in Melbourne it was up 3.8 %. In contrast, regional markets had seen a slower growth rate of 1.2 %. These figures underscore the potential for the scheme to exacerbate regional disparities.

Another link directed readers to the Treasury’s fiscal impact assessment, which projected that the scheme would cost the federal budget $3.8 billion over the next decade, with the largest outlay in the first two years. The assessment also highlighted the multiplier effect on the economy, estimating an additional $5.4 billion in economic activity due to increased construction, supply chain activity, and consumer spending.

The article also referenced a briefing paper from the Australian Housing and Urban Development Corporation, which argued that the scheme could ultimately reduce the cost of living for young families by creating more affordable entry points into the housing market. The paper noted that a long‑term price increase could be offset by the broader benefits of greater home‑ownership rates, such as increased wealth accumulation and stability.

What Lies Ahead

While Albanese’s concession might be viewed as a political risk, it also signals a growing recognition that housing policy cannot be isolated from macroeconomic realities. The Prime Minister hinted at future policy tweaks, including a potential “tiered guarantee system” that would scale the deposit guarantee based on local market conditions, and a planned increase in public housing investment.

Moreover, the government has indicated it will monitor the scheme’s impact closely, with quarterly reviews scheduled to assess both supply and demand metrics. If the price‑increasing effect proves too steep, the Treasury may explore ways to adjust the guarantee level or introduce complementary supply‑side incentives.

In the meantime, the debate continues. On one side, first‑home buyers and advocacy groups celebrate the scheme as a breakthrough. On the other, developers, mortgage lenders, and economic analysts caution that the policy’s benefits could be partially eroded by a surge in house prices.

Albanese’s admission of the “more expensive” side of the scheme is a significant moment for the Australian housing conversation. It underscores the inherent trade‑offs in designing policy that simultaneously seeks to enhance affordability while preserving market stability. Whether the Albanese government can strike that balance remains to be seen, but the public conversation it has sparked is an essential step toward a more transparent and equitable housing future in Australia.