How the Australian Home Guarantee Has Affected the Sydney, Brisbane and Melbourne Property Markets (2026 Update)

The Australian Government’s Home Guarantee Scheme — most recently expanded into a broader 5% Deposit Scheme — has become one of the most influential policy levers shaping Australia’s property markets in 2025–26.

While designed primarily to help first home buyers enter the market sooner with a smaller deposit and without paying lenders’ mortgage insurance (LMI), the scheme’s impact is being felt well beyond individual buyers. It has altered demand dynamics, particularly in Australia’s largest cities: Sydney, Melbourne and Brisbane.

For Australian expats planning a purchase from overseas or preparing for a return home, understanding these shifts is critical.

What the Home Guarantee Scheme Actually Does

At its core, the Home Guarantee Scheme allows eligible first home buyers to purchase a property with as little as 5% deposit (or 2% in some single-parent cases), with the Australian Government acting as guarantor for up to 15% of the loan. This removes the need for borrowers to pay LMI.

Recent reforms have:

• Removed income caps

• Unlimited scheme places

• Increased property price caps to better reflect current market values

  • Sydney: ~$1.5 million

  • Melbourne: ~$950,000

  • Brisbane: ~$1 million

These changes have materially expanded the number of properties and buyers eligible to participate.

Market Impacts by City

Sydney: More Buyers, Higher Demand at the Entry Level

Sydney remains Australia’s most expensive housing market. The expanded price caps now allow properties up to around $1.5 million to qualify under the scheme, bringing many previously out-of-reach homes into scope for supported buyers.

Impact so far:

• A noticeable increase in first-home buyer activity, with applications rising sharply after the expansion

• Increased competition at the entry-level and lower-middle segments

• Upward pressure on prices in areas where listings remain constrained

In a city already challenged by limited supply, the scheme has helped buyers enter the market sooner — but has also intensified competition for existing stock.

Melbourne: Strong Uptake Without an Immediate Price Shock — Yet

Melbourne’s market has been more subdued than Sydney’s in recent years. However, the higher price cap (up to ~$950k) has opened up a wider pool of properties to first-home buyers.

Key trends:

• Strengthening first home buyer participation across metropolitan Melbourne

• Increased competition in inner and middle-ring suburbs

• Price growth has remained relatively contained so far, compared with Sydney

While Melbourne has not experienced sharp price spikes, demand stimulation is clearly present and could become more pronounced if supply remains tight.

Brisbane: Riding the Wave of Increased Participation

Brisbane has emerged as one of the biggest relative beneficiaries of the scheme.

With:

• More affordable price points

• Caps that cover a large portion of the market

The scheme has significantly boosted buyer participation.

Market effects include:

• Strong growth in first-home buyer applications across Queensland

• Heightened competition for affordable stock

• Noticeable price growth in segments where first home buyers are most active

Brisbane’s broader population growth and housing undersupply mean that increased demand is translating directly into tighter inventory.

Common Themes Across Sydney, Melbourne and Brisbane

1. Higher Activity at Entry-Level Price Points

Across all three cities, the expanded Home Guarantee has materially increased first-home buyer participation, particularly at the lower end of the market.

2. Risk of Price Growth in Supply-Constrained Markets

Economists and housing analysts have cautioned that stimulating demand without increasing housing supply can place upward pressure on prices, especially in already tight markets.

This effect is most pronounced in Sydney, but similar dynamics are emerging in Melbourne and Brisbane.

3. Accessibility vs Affordability

The scheme improves accessibility (lower deposits, avoided LMI) but does not directly improve affordability.

In practical terms:

• Buyers can enter the market sooner

• But prices relative to income remain stretched

Without a corresponding lift in housing supply, long-term affordability challenges remain unresolved.

What This Means for Australian Expats in 2026

If you’re an Australian expat considering a purchase in Sydney, Melbourne or Brisbane this year:

• Understand how government backing may change market competition, not just your deposit requirements

• Be aware that demand stimulation can influence pricing in targeted segments

• Focus on loan structure, serviceability and long-term affordability, not just access

• Engage with a broker early to navigate eligibility, lender policy and expat-specific income assessment

For expats, timing, lender choice and strategy matter just as much as the scheme itself.

Conclusion: A Policy With Real Impact — But Mixed Outcomes

The expanded Home Guarantee / 5% Deposit Scheme has had real and measurable effects on Australia’s major property markets.

It has helped many first home buyers enter the market sooner — particularly in Brisbane — and increased competition in Sydney and Melbourne. However, in supply-constrained environments, it also carries the risk of price pressure, reinforcing that the scheme is not a silver bullet for affordability.

For Australian expats, understanding how these dynamics interact with overseas income, lending policy and future plans is essential.

Want to Explore Your Options?

To explore your options, you can book a complimentary discovery call with Founding Director and Principal Mortgage Broker Adam Kingston

Adam will assess your borrowing capacity as an expat, explain the lending pathways available to you, and help structure a strategy aligned with your goals, timeframe and risk profile — with the clarity and care Australian Expat Finance clients consistently value.

The information contained is general information only and does not consider your objectives, financial situation and needs. Please talk to us if you need a fast-tracked home loan, and we can help you find a lender that has the processes in place to process the application quickly. We strongly recommend that you do not act on any information provided on this website without individual advice from your trusted advisor. You should also obtain a copy of and consider the Product Disclosure Statement for all financial products before making any decision.

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