Off-the-plan first home buyer demand now competes with investors

The Home Guarantee Mini Boom

On 1 October 2025, the Federal Government removed income restrictions and approval quotas from the Home Guarantee Scheme, opening the 5% deposit pathway to every eligible first home buyer. The market response was immediate and measurable. Research from Cotality (formerly CoreLogic) found that in the first six months of the expanded scheme, homes valued under the price caps grew 6.7%, against just 3.6% for homes above them.

But the scheme began eating itself. As under cap stock was bid up, the share of suburbs with a median value below the caps fell to just 11.6% by March. Cotality expected the guarantee to gradually lose its stimulatory power, with first home buyer demand skewing toward the outer fringes, regional markets, and increasingly, inner-city units as the most accessible under-cap option.

The Post-Budget Reality

Three rate rises and a “first home buyer friendly” Budget were expected to cool investor demand and clear a path for first home buyers.

The opposite has occurred.

Lendi Group (which operates Aussie Home Loans) reported first home buyer loan applications fell more than 20% in the six weeks to 3 July, driven by the tax changes.

On paper, it makes little sense - falling prices should lower the deposit hurdle. But the hesitation is rational. The same 5% deposit that got buyers in quickly now exposes them to negative equity as prices soften.

Equifax data shared with the Australian Financial Review shows 30-day mortgage arrears among new borrowers hit 0.78% in February - more than double the 0.39% rate for borrowers who purchased earlier. Many first home buyers are simply sitting it out, judging that the short-term risk to their financial position outweighs the opportunity.

First home buyers and investors are now competing for the same stock

Meanwhile, the Budget’s tax reforms have pushed investors decisively into new builds, the only place negative gearing and favourable capital gains treatment survive.

The early evidence is showing up in our own numbers. Oliver Hume data shows the proportion of new-build sales to investors in Victoria has risen above 40% for the first time since December 2024, while the first home buyer share of sales fell from 66.7% in April to 54.9% in June.

What this means for developers

New builds now hold a structural double advantage: first home buyers can access the First Homeowner Grant, which applies to new builds only, while investors retain exclusive tax incentives. Entry-level new stock has two demand engines running on different fuel: deposit schemes on one side, tax carve-outs on the other.

For developers of both inner-city built form and greenfield land projects, three things matter now.

1. Run dual-track releases, with separate messaging and allocation for first home buyers (schemes, caps, certainty) and investors (the negative gearing carve-out, CGT choice, and the pre-July 2027 window).
2. Price to the caps, product under the FHG new-build thresholds captures unlimited places scheme demand, while anything above it is selling on (thin) investor tax logic alone.
3. Hold the quality guardrail: genuine owner-occupier appeal protects both your first home buyer cohort and your investors’ resale depth.

Two Engines. One Partner. Oli Property connects developers with qualified investor demand, backed by Oliver Hume’s 70+ years in the Australian market - from sales strategy and release sequencing through to investor-ready research and campaign support.

MyFirstHome speaks directly to the first home buyer cohort, guiding buyers through schemes, deposits and finance pathways, and delivering developers engaged, purchase-ready first home buyer enquiry. You’ve got the stock.

We’ve got both buyers. Let’s talk. Enquire here.