The Commonwealth’s expanded Home Guarantee Scheme (HGS), which increases access to loans with 5% deposits, is likely to boost Australia’s short-term housing demand.

According to REIWA’s forecasts and recent price momentum, this could significantly increase upward pressure in Perth. Analysis of the market and modelling points to price increases of about 8–12% in areas where supply is still limited and where first-time or low-deposit buyers are price-eligible.

In addition to explaining why, this blog provides local Perth mechanics with a breakdown of ABS and REIWA statistics, assesses risks and winners and losers, and offers helpful guidance that Bargoti Real Estate can utilise with investors and clients.

What is the expanded Home Guarantee Scheme?

The Home Guarantee Scheme (HGS), formerly known as the First Home Guarantee, provides government-backed assurances to lenders, allowing qualified buyers to secure loans with as little as a 5% down payment and without incurring mortgage insurance (LMI) fees.  

• The Commonwealth broadened the program in 2025 by removing or reducing income caps for specific streams, lifting participant caps, and raising property price thresholds in numerous regions.
• This made 5% deposit access available to a much wider range of first-time and, in some versions, family buyers.  
• The expansion and modelling used to evaluate consequences are outlined in the government’s impact analyses and supplemental materials.
• One of the primary obstacles to admission—the deposit hurdle—is lowered by the plan. Because the guarantee eliminates the requirement for LMI, consumers save approximately 5% upfront.
• The guarantee is a contingent responsibility on the Commonwealth (a guarantee to lenders), not a transfer of money.
• More buyers (and occasionally higher-income buyers) can use it because expansion eliminates caps and raises price/income thresholds. At lower deposit levels, that increases demand elasticity.

1. Experts caution that the Home Guarantee Scheme (HGS), introduced to offer first-time homebuyers an advantage, may ultimately drive them farther out of the market as demand and prices rise.

2. According to a report by Lateral Economics for the Insurance Council of Australia (ICA), the Home Guarantee Scheme may put first-time homebuyers in a worse position, despite the program being created to assist them in entering the market.

3. Lower-income earners will face even greater difficulty entering the real estate market under the government’s expanded First Home Guarantee, according to the ICA, as the program is expected to increase home prices.

4. A review of the government program by the economic consultancy Lateral Economics revealed that we might see the opposite effect, despite the scheme’s claimed goal of making it easier for Australians to buy their first property.

5. While ICA projected a much higher figure, estimating that some locations might see a spike of up to 10%, the Treasury calculated that the scheme may result in house values growing by 0.5% over the next six years.

6. According to the analysis, a first-time homebuyer may save $21,000 to $28,000 on lenders’ mortgage insurance (LMI) under the new plan; however, the property’s value may increase by $37,100 to $69,300.

7. If the trend continued, potential buyers would be priced out of the market and would need to increase the price of their homes by $16,100 to $41,300 in comparison to the existing market.

8. Lateral Economics estimates that around 6,500 prospective buyers will be priced out of the market in the first year of the program alone, since home price increases greatly exceed the savings from avoiding LMI.

9. Although up to 40,000 first-time homebuyers are anticipated as a result of the HGS reforms, ICA claims that the program will actually hurt the people it is intended to assist by favouring those who already plan to purchase a property through other channels.

10. According to the survey, the percentage of people who own a property is expected to increase only slightly over the next five years, from 66% to 67.2%.

Macro picture: housing, inflation and liquidity (what ABS and the RBA are telling us)

ABS property and price information, as well as central bank commentary (RBA), which influences credit conditions and mortgage rates, are two crucial data sources for Perth price trends.

1. ABS – what the data indicates (snapshot from June 2025)

• The average price of residential homes grew throughout the quarter, according to ABS.
• The overall value of the dwelling stock rose, and the average price of a home in Australia surpassed $1 million (mean cost of $1,016,700 as of the June quarter 2025 release).  
• The ABS measure indicates sustained expansion in the overall value and stock of dwellings as well as widespread upward pressure on dwelling values nationwide.  
• State capitals are influenced by these national patterns, which provide the backdrop for REIWA’s readings specific to Perth.

2. Market nuances and RBA commentary

• In the short term, actions that artificially lower the deposit barrier may increase demand and drive up prices; the RBA has openly cautioned.  
• According to RBA analysis, increasing demand without addressing supply risks makes housing credit less accessible, and this could lead to a 1% to 2% increase in house credit growth, with localised price effects being more noticeable in markets with limited supply.  
• In summary, higher prices result from easier entry and restricted supply.

3. The significance of this macro image for Perth

• Perth’s local dynamics (which we’ll examine) support stronger growth even if national averages moderate.
• Improvements in the WA labour market, short-term supply constraints in certain suburbs, and a robust unit market mean that any additional buyer demand (via HGS) is more likely to result in price increases than in oversupplied markets.

Perth snapshot: REIWA trends and recent performance

Perth is already experiencing growth, according to REIWA’s 2025 market update. The association’s quarterly reports from 2025 reveal that the median house price movement is going towards 10% annual growth, with specific readings showing even stronger momentum for units. The market is sensitive to an increase in marginal buyers due to the low number of listings and fierce competition among buyers in several suburbs, according to REIWA’s assessments (April & July 2025 updates).

Key Perth data points to note (from REIWA and allied reporting):

• According to REIWA’s market projection, there might be a 10% increase in the price of Perth homes by 2025.
• Due in part to a shift in affordability and increased investor interest in apartments, units were expected to outperform homes in 2025.
• Market liquidity has tightened as a result of listing volumes in 2024–2025 being significantly below what REIWA views as a balanced market. Demand shocks are amplified by lower supply.

When combined, these data factors create the context: Since REIWA already anticipates significant growth, an expansion that broadens the pool of prospective buyers enhances the likelihood that actual growth will fall within the higher end of REIWA’s predicted range.

How a 5% deposit guarantee moves prices (supply & demand channels)

Understanding the channels helps convert policy to price impact.

1. Effects of demand

• Since the guarantee often eliminates LMI, less money is required upfront.  
• This makes some tenants and close-in households active bidders instead of “on the sidelines.”
• When vying for inexpensive stock with more seasoned buyers, newcomers may place more aggressive (panic) bids because they frequently have smaller cash buffers.
• A broader credit base, pursuing a finite supply, results in higher clearing prices; lenders’ ability to offer 95% loans expands the effective pool of credit.
• Sometimes, investors shift their positions to buy apartments or real estate in rapidly developing areas, hoping to make a profit, which creates secondary demand.

2. Effects on the supply side (short/medium term)

• In the medium term, the supply of housing is comparatively inelastic, particularly in established areas.  
• Approvals and new builds take time. Therefore, price increases rather than quantity increases are the main result of immediate demand increases.
• According to the Treasury’s own impact analysis, the supply response is expected to occur eventually.
• Still, it doesn’t immediately meet demand due to delays in building and approval, as well as labour and material shortages.

3. Transmission of prices

• In short, higher clearance prices are the result of more qualified buyers, combined with the same (or gradually growing) number of available homes.  
• That multiplier is higher in situations where buyer confidence is high and the stock is thin.
• The multiple is likely to be significant in the Perth market due to existing listing shortages and growing demand for units.

Why Perth could see ~10% price lift — step-by-step model

We’ve laid out a rational route from HGS expansion to a price rise of approximately 10% in Perth, as outlined below. The modelled result is based on observed inputs (REIWA, ABS, Treasury/OIA studies, and RBA cautions) and does not guarantee a deterministic outcome.

Step 1: A rise in qualified buyers

• Participant caps and numerous income/property constraints are eliminated with the HGS expansion.  
• The policy greatly expands the pool of eligible buyers, according to the Treasury’s supplemental study, and experts and the media have suggested that demand may surge in qualified markets.  
• The total number of ‘active’ buyers may be high in Perth, where first-home activity has always been significant.

Step 2: The percentage of active bidders

• Not every household that becomes eligible will purchase right away.
• According to studies from Housing Australia, historical HGS uptake trends indicate that a portion of qualified buyers convert within 6 to 12 months.  
• However, conversion is quicker in a market showing momentum (REIWA’s 2025 projection), as more tenants switch to buyers sooner, thereby increasing bid volume.

Step 3: Perth’s supply and demand elasticity

• Local data from REIWA indicates a tight market and a lack of listings.  
• Economists frequently use local demand/supply elasticities to demonstrate that, depending on elasticity, a 1% rise in demand can translate into a multiple (typically greater than 1x) in price growth when supply is limited.  
• In comparison to more balanced markets, Perth’s elasticity profile for 2024–2025 suggests stronger multipliers.

Step 4: Psychology and price momentum

• Because early price increases raise expectations, which in turn encourage greater buying (FOMO), markets are path dependent.  
• Short-term growth can be accelerated by anticipation alone, as the HGS expansion is being widely discussed in the media and experts are warning of price increases.  
• The RBA warns about this particular situation.

Step 5: Numbers and empirical anchoring

• In their update, REIWA noted that Perth may see a 10% increase in 2025; however, independent analysts and Treasury/OIA modelling have cautioned that prices could rise in areas where the program is available.  
• A midpoint estimate of about 10% is a realistic realised figure for the Perth median in the short to medium future if baseline REIWA growth is between 8 and 10% and HGS development adds another short-run demand shock.  
• This aligns with the RBA’s and market experts’ cautions, as well as REIWA’s prediction.

Which segments and suburbs will be hit hardest (and which will benefit)

1. Likely hotspots for price growth (greater impact)

• The majority of first-time homebuyers and low-deposit entrants are drawn to accessible middle-ring suburbs in Perth, where the median price is below the program’s threshold.  
• Suburban areas with family amenities and decent transport connections should be highly competitive.  
• The suburb-level data from REIWA should be utilised to pinpoint particular LGA pockets.
• Unit markets near universities and the central business district are more attractive to investors and first-time homebuyers due to their lower headline prices and REIWA’s flagged unit outperformance, which accelerates the growth of unit prices.
• In the suburbs, where supply is unable to keep up with demand (due to low vacancy and few new permits), price pressure is greatest.  
• This is an insightful look into REIWA’s observations on low listings.

2. Areas with less impact

• The HGS is unlikely to significantly alter demand in upscale communities that already exclude qualified buyers until limits include more expensive areas.
• New greenfield estates with a huge impending stock will see less of a relative pricing impact than outer-ring estate developments when supply is growing quickly.
• This is because supply can keep up with the growing demand more quickly.

3. Winners and losers

• Winners include investors who time acquisitions early, owners of apartments or units close to transportation hubs, and sellers in target suburbs.
• Losers include tenants who must deal with increased rents and fewer rental listings, potential buyers who are unable to obtain the program (such as first-time homebuyers, for whom options are limited), and households whose purchasing power is diminished by the rate of price increases.

Risks — how and when this could reverse

Several risk factors could slow or even reverse the price increase generated by HGS:

• Interest rate movements: Higher repayments may stifle demand and correct prices if the RBA (or market rates) significantly raise mortgage rates. If credit expansion intensifies inflationary pressures, the RBA still has options.
• Reversing policy or tightening lending regulations: In response, lenders can tighten serviceability buffers or reinstate more stringent credit approval standards, which could lower effective participation.
• Supply surprise: Price increases may be restrained if permits and completions increase more quickly than anticipated (for example, a surge of commencements in outer Perth).
• Credit losses in the guarantee pool: Investor and media sentiment may shift rapidly if loans covered by the guarantee begin to exhibit high arrears, which could limit the program’s effectiveness or influence market psychology. Contingent risks of guarantees are noted in Treasury documents.
• Timing: Price increases are most likely to occur in the near future (the next six to twelve months). Supply becomes essential in the medium term (12–36 months); price increase may slow if development and approvals continue.

What Bargoti Real Estate should tell vendors, buyers and investors — a practical playbook

By using strategic tactics and customised messages, Bargoti Real Estate can bring value in this changing climate.

1. Messages for sellers or suppliers

• Inform suppliers that buyer pools are growing and that there will probably be more qualified first-time homebuyers in the near future.  
• This can support reasonable pricing that leans towards the higher end of similar ranges.
• Short-term listing (within 0–3 months) may maximise price discovery if sellers are not in a rush, but always emphasise comparables and reasonable bargaining cushions.
• Highlight qualities that appeal to first-time homebuyers, such as low maintenance, energy efficiency, accessibility to public transportation and schools, and adaptable floor plans that accommodate families or roommates.

2. Buyer guidance (first-home + general)

• Obtain pre-approval and have all necessary paperwork available if you are eligible for HGS.  
• Because low-deposit loans have more leverage and less buffers against rate increases, they make a substantial budget even more crucial. Encourage repayment stress testing.
• Be prepared for increased competition; consider expanding your search parameters, focusing on strategically placed apartments, or exploring off-market alternatives.  
• Bargoti’s network can find listings before they are launched.
• Right now, units are very popular.  
• However, investors should assess serviceability and cash flow (rents) under higher rates; capital gains are possible, but only if the fundamentals hold steady.

3. For property managers and landlords

• Some tenants may attempt to purchase due to increased buyer demand, which could lead to narrower vacancy rates and allow for modest rent increases in areas with strong demand.  
• Monitor supply constraints and adjust your marketing accordingly.
• Where applicable, landlords should consider longer leases and stress-test loan serviceability under hypothetical rate rises.

4. Modifications to Bargoti’s operations

• During the first three months following significant policy announcements, update valuation models every week.
• Make brief “HGS explainer” handouts that include examples from nearby suburbs to help clients comprehend thresholds and valuable results.
• To educate agents and clients, create a real-time dashboard that pulls ABS quarterly data, listing volumes, days on market, and REIWA suburb medians.

Scenario analysis — base/upside/downside with numbers and assumptions

Three hypothetical scenarios for Perth’s median home prices throughout the course of the upcoming year are shown below. These are not predictions; instead, they are meant to serve as examples to enhance client discussions.

1. Common assumptions:

• Pre-HGS expansion baseline momentum: REIWA estimates an 8–10% growth rate for Perth by 2025. As a baseline, use 8%.
• In Perth, HGS expansion is expected to boost effective buyer demand by an additional 2–4% (based on market discussions and Treasury/OIA uptake modelling).
• Negligible in the short term (3–12 months), moderate in the long term.

2. Base case (likely): median increase of +8% to +10% each year

• The baseline, which is 8% plus the 0-2% HGS incremental effect (demand absorbed with moderate competition), is the input.
• Result: The median price of a home increases by about 8–10% annually. This aligns with the main prediction of REIWA.

3. Advantageous scenario (HGS increases momentum): +12% to +15%

• Listings stay tight, investor activity rises, and HGS causes a significant conversion of previously sidelined buyers.  
• A demand shock of about 4% or more, combined with low listings.
• Quick increases in clearing prices, especially in reasonably priced suburbs and apartments.  
• This makes sense in hot spots and is consistent with analysts’ cautions that guarantees may cause costs to rise noticeably.

4. Rate shock or policy downside scenario: 0% to +5%

• The government restricts the use of the scheme, mortgage rates increase, or lenders tighten their lending criteria; as a result, supply increases in the outer suburbs.  
• The demand shock subsides.
• Prices either stagnate or slightly increase.  
• When rates or supply improvements counteract demand stimulus, this is the RBA-warned tail risk.

5. Useful statistics (example of median price):

If, as an example, the median home price in Perth is $600,000, then:

• Base: $654,000 + $54,000 + +9%
• Benefit: +13 percent => $678,000 + $78k
• Negative: +3% = $618,000 + $18,000

(When creating client materials, substitute the current Perth median for $600k; Bargoti should obtain the precise median for the selected suburb group from REIWA.)

Policy implications and the path to sustainable affordability

The central conflict is that while the HGS lowers the demand-side deposit barrier, it does not immediately alter supply. Both the RBA and government impact evaluations indicate that supply responses—such as faster approvals, incentives for a variety of dwelling types, and targeted social/affordable home supply—are necessary for long-term affordability. Guarantees are a temporary access mechanism, and supply gaps will influence the ultimate welfare impact, according to Treasury/OIA modelling.

Levers of policy that would support HGS and lower the risk of price inflation:

• Quicker approvals and planning for higher-density and infill housing close to transit lines.
• Targeted incentives for affordable rental stock and build-to-rent properties to alleviate the burden of rent on low-income households.
• Guaranteed access is being phased off in accordance with supply measurements (to reduce demand shocks in tight markets).
• To ensure that low-deposit buyers are aware of the risks and refrain from overstretching their serviceability, monitoring and borrower education are necessary.

Latest (September 2025) — headline facts and what they mean for Perth

1. According to the June quarter 2025 release of the ABS value-of-dwellings series, Australia’s residential property portfolio increased once more in the June quarter, bringing the overall value of dwellings to around $11.6 trillion. This significant increase in national valuation supports the general increasing trend in real estate prices.

2. According to REIWA’s Perth market feed, updated on September 25, 2025, and including the most recently released data covering transactions up to August 2025, median property prices in Perth are approximately $800k.

3. REIWA also reports median levels, tight listings, and quick sale times in September 2025. That local momentum increases the potential pass-through of any demand shock induced by policy.

4. According to the official Treasury/OIA supplemental analysis, the Government’s Home Guarantee Scheme expansion will eliminate participant caps and expand eligibility (uncapped places, loosened income limits, and higher property price caps), resulting in a structural increase in the number of buyers who can obtain loans with a 5% deposit.

5. Although Treasury’s modelling, which is used in public publications, indicates less average economy-wide price impacts, localised effects are still a concern. The Reserve Bank (and RBA officials) have cautioned that the program may raise housing demand and push prices higher in the short term.

6. The conflict between a national-averaged modelling result and more pronounced local effects in limited areas, such as Perth, has been highlighted in commentary since the expansion (September 2025).

7. Two thousand twenty-five rate fluctuations have so far included cuts this year, which have lowered the cash rate and mortgage costs compared to the same period last year.

8. In the short term, lower rates, combined with the HGS expansion, are expected to encourage higher borrower demand. Rate reductions and the HGS combined are projected to increase buyer activity, according to recent market opinion (September 2025).

Final summary

Together with Perth’s present market conditions (limited listings, strong unit demand, and a bullish REIWA outlook), the extended Home Guarantee Scheme lowers a significant barrier to ownership and significantly enhances the likelihood of more abrupt short-term price hikes. With REIWA’s own prediction of approximately 10% growth in Perth, and comments from the Treasury and RBA, a 10% median price increase in Perth is a reasonable and prudent planning assumption for customers over the next 6 to 12 months.  

Preparing sellers to capitalise on increased demand, educating buyers about the dangers of leverage, and offering investors thorough stress testing should be Bargoti Real Estate’s top priorities right now.

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