The Australian government has announced a significant policy reform, which will remove the purchase price restriction and reduce the minimum deposit requirement from 20% to 5%. The property market is set to undergo significant changes as a result of this project, which is part of a broader initiative aimed at improving housing affordability and accessibility, particularly in rapidly expanding regions such as Perth. It is anticipated that the new policy will take effect immediately and will impact not only first-time homebuyers but also investors and real estate developers.

A 20% down payment has historically been a significant deterrent for many prospective homebuyers, particularly younger purchasers and families with low to moderate incomes. The administration aims to stimulate activity in the housing market and increase property ownership by lowering the deposit requirement to 5%. The elimination of the purchase price cap is also essential since it frees buyers from the restrictions that assistance programs previously placed on their ability to view a wider variety of properties.

Federal Home Guarantee Scheme: Reducing the Deposit Barrier

1. Before obtaining a home loan, first-time homebuyers and some eligible buyers have historically faced significant obstacles due to the requirement to save a substantial deposit, typically 20% of the property’s price.  

2. The 20% deposit requirement was introduced to mitigate lender risk and reduce default rates; it has long been a deterrent for many Australians seeking to purchase real estate.

3. The Federal Government responded by expanding the Property Guarantee Scheme (HGS), which now enables qualified purchasers to buy a property with a 5% down payment and government guarantees. This program eliminates the need for lenders to demand a sizable deposit or lenders mortgage insurance (LMI) by having the government guarantee a portion of the loan.

4. Although the program is applicable nationwide, it has a particularly significant effect in Western Australia, where home affordability has varied with market cycles. The government wants to reduce the deposit from 20% to 5% to:

• Make homeownership more accessible
• Encourage economic recovery
• Address the issues of affordability

5. Notably, the program eliminates upper price limitations on qualified properties in several locations, including the metropolitan area of Perth. This is in contrast to earlier iterations of the program, which had stringent price caps that frequently disqualified homes of greater value.  

6. The government’s awareness of growing property values, especially in Western Australia, and its faith in the market are reflected in the removal of these limitations.

Western Australia’s Stamp Duty Concessions and Threshold Adjustments

1. To alleviate the financial burden on homebuyers and stimulate the real estate market, WA has implemented targeted stamp duty discounts and bracket adjustments, in addition to federal reforms. Many potential buyers are deterred by the substantial upfront expense of stamp duty, which can increase the cost of buying a home by tens of thousands of dollars.

2. WA’s recent policy changes include:

• Greater urban thresholds
• Gradual bracket modifications
• Long-term concessions

3. The stamp duty threshold for residential properties purchased in Perth’s metropolitan area has been increased to $700,000. This implies that, depending on the precise purchase price, buyers of properties up to this amount pay either no stamp duty or a reduced amount of stamp duty.

4. To provide more relief to first-time homebuyers and those purchasing properties within specific price ranges, the state has adjusted its stamp duty brackets. Their stamp duty exemptions or concessions are available to particular buyer categories, such as first-time homebuyers and qualified retirees.

Contrasting the New Framework with the Previous 20% Deposit Norm

1. Before these modifications, most of Australia, including Western Australia, adhered to the 20% deposit requirement. Buyers typically require a 20% deposit of the property’s value to obtain a mortgage without having to pay the lender’s mortgage insurance (LMI). LMI was typically required for buyers with less than 20%, resulting in thousands of dollars in additional expenses.

2. The high deposit requirement:

• Delayed entry into the market
• Limited choice
• Reinforced socioeconomic barriers

3. By reducing the required deposit to 5% through the Home Guarantee Scheme, the government has drastically lowered this barrier. However, there are important nuances:

• Eligibility criteria apply: Not all buyers qualify for the guarantee. The scheme typically targets first-home buyers, single parents, and other eligible groups.
• Price caps removed, but risks remain: While the removal of price caps allows buyers to purchase more expensive properties under the scheme, this could lead to increased borrowing and market risk if prices continue to rise rapidly.
• Potential for increased competition and price inflation: More buyers with lower deposits may push up demand and property prices, particularly in already active markets such as Perth.

The Home Guarantee Scheme (HGS)

1. The Australian Government’s Home Guarantee Scheme (HGS) aims to help qualified home buyers purchase a property sooner. Housing Australia is responsible for overseeing the scheme on behalf of the Australian Government.

2. Three different kinds of guarantees are included in the Scheme:  

With a down payment of as little as 5%, First House Guarantee (FHBG) enables qualified homebuyers to own a house sooner. There are 35,000 spots available for the fiscal years 2024–2025.

• With a deposit as low as 5%, the Regional First House Buyer Guarantee (RFHBG) enables qualified regional homebuyers to purchase a house in a regional location sooner. There are 10,000 spots available for the fiscal year 2024–2025.
• With a deposit as low as 2%, the Family Home Guarantee (FHG) helps qualified single parents and qualified single legal guardians of at least one dependent purchase a home sooner. Five thousand spots are available for the fiscal years 2024–2025.
• The New Home Guarantee (NHG) is no longer available. If the eligibility conditions and NHG timelines are met, an NHG space reserved on or before June 30, 2022, may still proceed to settlement.

3. To verify your eligibility for an HGS Guarantee, your lender will require the pertinent Notice of Assessment (NOA).

• The 2022–2023 NOA will be needed if a Participating Lender makes a reservation for a Scheme Place by June 30, 2024, at the latest. After this date, if all other requirements are met, a guarantee may be provided, and settlement will be completed.
• The 2023-24 NOA will be needed for Scheme Place bookings made by a Participating Lender on or after July 1, 2024. While the NOA is being obtained, a participating lender may offer a 90-day expiration term; however, this will be necessary before any guarantees are issued and settlement takes place.
• Under the First Home Guarantee or the Regional First Home Buyer Guarantee, Housing Australia offers the Participating Lender a guarantee of up to 15% of the loan value; under the Family Home Guarantee, the Guarantee is up to 18%.  
• This allows the buyer to purchase a home without having to pay the lender’s mortgage insurance. For a house loan, the Guarantee is neither a deposit nor a cash payment. There are eligibility requirements.

Guarantee Comparison Table

Perth Property Market Snapshot: An In-Depth Overview

1. The Perth property market has experienced a significant resurgence in recent times. As of mid-2025, the median house price in Perth is estimated to be between approximately A$775,000 and A$831,000.

2. This marks a notable recovery and growth phase compared to previous years.

• Over the last 12 months, Perth has recorded a sharp year-on-year (YoY) price growth of approximately 19%, making it the leading capital city in Australia in terms of annual gains.
• Perth’s housing market growth has outpaced that of many other major cities, with annual price increases often cited at between 16.7% and 19%.
• The unit market in Perth has also performed strongly, with median prices reaching approximately A$592,417, representing an impressive 17.9% year-over-year (YoY) increase. This demonstrates a robust demand not only for houses but also for apartments and units, reflecting diverse buyer preferences in the city.

3. The rapid price growth signals increased buyer confidence, driven by factors such as improved economic conditions, government incentives, and historically low interest rates for much of the recovery period.

Forecasts for 2025

1. With most major industry projections predicting ongoing, albeit more moderate, growth in 2025, the outlook for Perth’s real estate market remains positive.

• According to the National Australia Bank (NAB), home prices are expected to rise by a healthy 5.8%.
• Westpac predicts a more cautious 4.0% growth rate.
• KPMG predicts price increases to be between 4.0% and 5.2%.
• According to the Real Estate Institute of Western Australia (REIWA), more robust growth is anticipated, with projected gains of over 10% for units and more than 10% for houses.
• For both homes and apartments, real estate data companies such as HereProperty and DPN forecast growth rates of between 5% and 8%.
• According to a Reuters survey of experts, Perth’s growth rate is exactly about 5%.  

2. Across these forecasts, Perth house prices are expected to increase by 4% to 10% during 2025. Units are expected to perform slightly better, benefiting from higher demand driven by affordability and shifting lifestyle preferences.

3. To contextualise current market conditions and forecasts, it’s helpful to review Perth’s property price trends over the last five years:

• 2020–2021 (Boom Phase): Perth’s property market experienced significant growth, with annual rates of 15% to 25%. This boom was driven by factors such as easing COVID-19 restrictions, low interest rates, and strong demand from interstate migrants and investors.
• 2022–2023 (Correction Phase): The market experienced a decline, dropping by approximately 8% during this period. This downturn was primarily influenced by the Reserve Bank of Australia’s (RBA) interest rate hikes, which tightened borrowing capacity and cooled demand.
• 2023–2025 (Recovery & Stabilisation): The market rebounded strongly, with the recent surge bringing growth back to around 19% year-over-year (YoY) by 2024–25. While growth is expected to moderate in 2025, the market is stabilising on a higher price base with positive momentum.

Anticipated Impact on Perth’s Property Market

1. Perth has already been witnessing a steady increase in housing demand, driven by factors such as interstate migration, infrastructure development, and relative affordability compared to cities like Sydney and Melbourne. This policy change is expected to act as an accelerant for Perth’s property market.

• Increased Buyer Demand
• Property Price Growth
• Affordability Dynamics
• Impact on Lending and Investor Activity

2. The expected change in buyer composition in Perth’s real estate market before and after the deposit policy change is depicted in this bar graph. It emphasises

how lower deposit requirements are expected to boost the number of first-time homebuyers.

3. A spike in first-time homebuyers is anticipated as a result of the entry hurdles being drastically reduced. Financing will now be available to more Australians who were previously priced out of the market due to high upfront expenses. There will be increased competition for available properties as a result of this larger buyer pool, especially in highly sought-after suburbs.

4. Property prices are expected to rise as demand increases and supply struggles to keep up. According to analysts, Perth’s central business district and family-friendly suburbs, such as Baldivis, Ellenbrook, and Alkimos, may experience faster rates of growth. The market can change from being a buyer’s market to a strong seller’s market as a result of this.

5. Although the goal is to increase housing accessibility, the flood of new purchasers may inadvertently drive up prices and ultimately make housing less affordable. Despite the lower initial entrance cost, potential buyers will have to negotiate a more competitive market.

To account for the rise in low-deposit purchasers, lenders may update their risk models.

6. At the same time, first-time homebuyers may become more competitive, prompting investors to adjust their tactics and focus on new areas or real estate projects. Demand for land releases on Perth’s outskirts, as well as an increase in off-the-plan investments, are also possible.

Summing Up: A New Era for WA Property Buyers

The combination of the Federal Home Guarantee Scheme offering 5% deposit guarantees and WA’s enhanced stamp duty concessions creates a more accessible and buyer-friendly market environment. For many aspiring homeowners, these reforms present a real opportunity to enter the property market sooner and with less upfront capital.

However, buyers and investors should remain mindful of the broader market implications. Reduced deposit requirements and the removal of price caps could drive stronger demand and upward pressure on property prices in Perth and WA more broadly. Understanding these dynamics is critical for making informed buying decisions.

For prospective buyers, especially first-time homebuyers, consulting local real estate experts, such as Bargoti Real Estate, can provide tailored advice and help navigate this evolving landscape. With the right strategy, buyers can capitalise on these reforms and make confident steps toward property ownership in Western Australia’s promising market.

DISCLAIMER – The information and opinion provided is for guidance and general informational purposes only. The sole intention is to provide general understanding of the subject matter so the readers can assess whether they need more detailed information. The information provided on this website should not be regarded as a financial, business, legal or real estate advice and it is strongly recommended that the readers should seek their own independent financial, business, legal or real estate advice. While every effort has been made to ensure that the information and the material is correct and up to date at the date of publication. However, we do not guarantee or warrant the accuracy or completeness of the information provided as the factors like changes in circumstances after the time of publication, may impact such accuracy or completeness. Bargoti real estate will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.