Australia First-Home Buyer Demand 2026

First-Home Buyers in 2026: Support Schemes vs Rising Prices

Australia’s housing market in 2026 feels a bit split down the middle. On one side, confidence is still strong. Buyers are active, and property professionals remain optimistic. On the other side, rising prices, limited housing supply, and affordability pressure are making it harder, especially for first-home buyers.

Government support schemes are helping many people get into the market. But they can only do so much. They don’t fix the bigger issue: homes are still expensive, and there simply aren’t enough of them.

Support Schemes Are Boosting Activity: But Not Fixing the Core Issue

One of the biggest influences on first-home buyer demand this year is government support, especially programs that allow buyers to enter with smaller deposits.

The expanded 5% deposit guarantee scheme (often still called the First Home Guarantee) allows eligible buyers to purchase with just a 5% deposit and avoid paying lender’s mortgage insurance. The scheme has been extended into 2026, continuing the government’s effort to help more Australians buy their first home.

And the numbers show it’s working,  at least in terms of activity.

In the final quarter of 2025:

• First-home buyer and new owner-occupier loans increased 6.8% compared to the previous quarter.
  
• The total value of those loans jumped 15.5%.
  
• The average loan size reached a record $607,624, particularly in New South Wales.

These figures clearly show that support schemes are encouraging buyers to act. Agents are seeing it too. According to over three-quarters of survey respondents, there has been a rise in the number of requests for purchase following the introduction of additional 5% deposit options and benefits. However, this influx can create challenges subsequently due to increased competition within the marketplace (or network of potential purchasers). Many first-time buyers now compete with some degree of limitation on their availability for purchase. It has put upward pressure on the value and competition for ownership of a home, over what would typically occur without additional 5% deposits or incentives being made available. 

Affordability Is Still the Real Challenge

Even with government support, affordability remains a major hurdle.

Median prices across most capital cities continue to rise. And while schemes may help buyers qualify for a loan, many still struggle with:

• Serviceability limits

• Rising interest rates

• Higher borrowing costs

Looking at the bigger picture, property prices in major Australian cities have grown much faster than wages over the past few decades. That gap has made home ownership harder to achieve.

Forecasts suggest prices are not slowing significantly in 2026 either. KPMG’s Residential Property Market Outlook projects national house prices to rise around 7.7% this year, even with interest rate uncertainty. Markets often seen as “more affordable,” like Darwin and Adelaide, are still expected to grow in the high single digits.

This tells us something important: support schemes help buyers get in, but they do not reduce prices. The affordability gap remains wide. And supply remains tight.

There are simply not enough entry-level homes, smaller houses, townhouses, and affordable apartments to meet demand. Listings in many areas are well below long-term averages, which keeps upward pressure on prices.

The Psychology Behind First-Home Buyer Decisions

Another important factor in 2026 is buyer psychology. There is an updated sense of urgency due to support schemes, resulting in first-home buyers feeling pressured to quickly purchase property to avoid any potential property price increases or changes to eligibility criteria. 

Support schemes are creating urgency. Many first-home buyers feel they need to act quickly before prices rise further or before eligibility rules change. This “fear of missing out” can push buyers to move faster than they should. Some may stretch financially or rush decisions without proper planning. That’s where strategic advice becomes important. Entering a competitive market without a clear financial plan can increase risk. 

What the Data Is Showing

Let’s break it down clearly:

• Confidence is still strong. More than 8 in 10 property professionals expect dwelling values to rise in 2026.

• Support schemes are lifting demand. Loan volumes and loan values have increased noticeably.

• Prices continue to grow. Forecasts point to further national price rises this year.

• Supply remains tight. Low listing numbers continue to keep competition high.

In short, support is helping buyers enter the market, but it is not reducing pricing pressure.

Support Helps: But It’s Not a Complete Solution

Supportive programs provide opportunities for people interested in purchasing a home that have otherwise been prevented from doing so. Additionally, they provide a sound way for someone who wants to buy a home to do so at an earlier date rather than waiting a longer time. One example includes:  

• High prices relative to income.

• Low housing supply in affordable segments.

• Rising borrowing costs and mortgage stress.

• Competition from investors and other buyers.

Successful first-home buyers in 2026 will be those who understand both the opportunities and the limitations of current policies. They need realistic financial planning, clear market insights, and strategic support when making offers, exactly the kind of guidance Buyer Insight provides to its clients. 

Making Informed Decisions in a Tough Market

If you are either a first home buyer or someone who is assisting them. The advice for the best year to consider buying real estate (2026) is simple; support schemes assist. But these are not a magic solution to solve all problems. It is vital to understand changes in market conditions, supply trends, and future value forecasts to assist with making the best purchases. 

When buyer agents understand both government policies and the local market, they can guide clients through affordability challenges, help them make confident offers, and choose properties that support their long-term plans. 

If you are planning to take a step ahead in your investment journey, contact us at Buyer Insight. You can also book a free consultation and follow us on Instagram and LinkedIn for regular updates.