National home values rose for the eighth consecutive month in September, with experts warning that an expanded federal government scheme for first-home buyers is set to add further upward pressure on prices. The national dwelling value climbed 0.8 per cent in September, the strongest monthly gain since October 2023, according to property research firm Cotality.
Darwin led the monthly gains with a 1.7 per cent surge, followed by Perth, Brisbane, Adelaide, Sydney, Canberra, Melbourne and Hobart. Over the September quarter, values rose 2.2 per cent, adding an average of $18,215 to the cost of a home.
From October 1, the federal government's Home Guarantee Scheme has no income or place limits and higher price caps. Buyers can purchase with as little as a 5 per cent deposit, avoiding lenders' mortgage insurance, with the government acting as guarantor for the remainder of the 20 per cent deposit. In Sydney, the price cap has risen to $1.5 million from $900,000.
Treasury modelling suggests the policy will lift values by just 0.5 per cent over six years, but other analysts are sceptical. Canstar's director of data insights, Sally Tindall, said the scheme is likely to add demand into a red-hot property market without a correlating increase in supply, potentially pushing prices higher.
Sydney mortgage broker Nathaniel Truong said higher-earning first-home buyers previously locked out by income caps are now flooding into the market. One client increased their budget from $1.15 million to $1.3 million under the expanded scheme. Saheel Mukadam, a higher earner now able to stretch further, said the advantages include saving on LMI and not draining all savings for a 20 per cent deposit.
Cotality's analysis shows a 5 per cent deposit means taking on a 95 per cent loan-to-value mortgage, costing hundreds of thousands more in interest over 30 years compared to a 20 per cent deposit. However, in Sydney, where the median rent is $801 a week, the scheme can shave six years off the time needed to save a deposit, saving around $251,000 in rent.
