Last week, the Australian federal government announced it will bring forward an expanded Home Guarantee Scheme starting in October, allowing all first-time homebuyers to purchase with just a 5% deposit. The expansion removes previous age and income limits and raises the maximum property price eligible for the scheme. The Treasury estimates an additional 20,000 guarantees in the first year and potential rental savings of AUD 87,000–350,000 for young Australians.
While aimed at helping first-time buyers enter the market faster, economists and analysts have raised warnings. Ben Picton, senior macro strategist at Rabobank, said the policy could fuel property speculation, prolong high housing prices, and push the market away from fair value. Independent economist Saul Eslake criticized the scheme for failing to address the structural problems in Australia’s housing system, potentially further driving up prices.
Experts also note that Australian household wealth is highly concentrated in real estate—over 53% of total assets, compared with 30% in the U.S.—increasing risks of a housing bubble and “wealth illusion.” Some measures have prompted concerns about excessive government intervention in financial markets, including potential distortions from underwriting loan insurance.
Analysts argue that the policy reflects a “financialized” approach to stimulating the housing market. While it may ease first-home buyer pressures in the short term, it could worsen structural housing issues and raise adjustment risks in the long term.