A few tweaks to a popular first home buyer scheme has driven a “surge” in Gen Zs buying their first home. And it’s not the only upside giving first home buyers a boost now.

The expansion of the popular 5% Deposit Scheme, combined with recent changes to rules for property investors, may be opening doors for young home buyers.

The scheme, which lets first home buyers get started with as little as 5% deposit, or 2% for single parents, is now open to all first home buyers – with unlimited places, higher property price caps, and no income limits.

These tweaks have made a huge difference, especially for Gen Z buyers aged 18-25.

Let’s take a closer look at what’s happening.

Gen Z demand jumps 22.8%

Last October saw several changes made to the 5% Deposit Scheme.

Annual place numbers were scrapped, income caps were waived, and the upper limit on property prices was lifted to reflect rising values.  

As a result, first home buyer demand has increased by a whopping 16.4%, says credit reporting agency Equifax.

Gen Z is leading the charge, with home loan demand among 18-25-year-olds rising 22.8% since October – the highest of any age group.

That matters because, as Equifax points out, Gen Z has historically found it especially difficult to pull together a 20% deposit.

Older first home buyers aren’t far behind though.

Home loan demand among buyers aged 26-35 is up 17.4%, with demand across first-time buyers aged 35-44 rising 16% since October.

How does the 5% Deposit Scheme work?

The 5% Deposit Scheme aims to help first home buyers get into the property market with as little as a 5% deposit. Solo parents may be able to buy with just a 2% deposit.

Buying with a smaller deposit can take years off your saving timeline.

But the potential benefits don’t stop there.

The 5% Deposit Scheme also sees the federal government guarantee your first home loan, so there is no need to pay lenders mortgage insurance.

This reduces upfront buying costs, leaving more money to put towards your first home.

If you’re keen to buy with a 5% deposit, it’s important to talk to us.

Not all lenders have signed up to the 5% Deposit Scheme, but from those that have, you can rely on us to help you find a home loan that matches your needs.

More good news for first home buyers

The expanded 5% Deposit Scheme isn’t the only thing working in favour of first home buyers right now.

This year’s federal budget introduced reforms designed to shift the scales in favour of first home buyers, says the government.

The budget changes to negative gearing and capital gains tax were introduced with the goal of levelling the playing field between first home buyers and investors.

It’s expected to reduce buyer competition in the more affordable end of the market typically favoured by first home buyers.

In turn, less competition could potentially impact property prices.

The Commonwealth Bank is predicting the federal budget reforms will see home prices rise 3% this year, down from previous forecasts of 5%, followed by price growth of 3% in 2027.

Time to get the ball rolling on your first home

With so many factors potentially working in first home buyers’ favour, it’s worth considering if you are home loan ready right now.

Call us to know for sure, and get the ball rolling on buying your first home.

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