Despite challenges in housing supply, the 2025 Australian budget updated the Help to Buy scheme and allocated funds for prefabricated housing, but introduced measures that discouraged foreign investment, previously crucial for high housing supply, amid calls for broader housing reforms.
In an effort to make homeownership more accessible, the 2025 federal budget has allocated an additional $800 million to the Help to Buy Scheme, significantly raising income and property price caps.
“This is part of our efforts to help more Australians buy a place of their own,” Treasurer Jim Chalmers (pictured) said during his budget address.
This expansion will increase the individual income eligibility from $90,000 to $100,000 and for joint applicants from $120,000 to $160,000, aiming to assist up to 40,000 Australians over the next four years.
The scheme adjustment also includes new property price caps, which are designed to give prospective buyers in pricier areas like Sydney and Melbourne more options, with caps set at $1,300,000 and $950,000 respectively.
“The higher price thresholds will mean a lot more homes are eligible for the scheme than previously, and higher income bands will also expand availability to more first-time buyers than before,” REA Group’s Angus Moore said.
The budget also included a $21 billion investment aimed at ramping up housing supply, which includes funding for the Housing Australia Future Fund to deliver 18,000 affordable homes.
This investment is part of a broader strategy to enhance the infrastructure and planning capacity at all government levels.
“Improving affordability has to be about supply, particularly building more homes where people want to live,” Moore said.
The treasurer allocated $49.3m to state and territory governments to enhance the industry, along with $4.7m for a voluntary national certification process to streamline approvals.
“Making homes in factories instead of onsite could cut construction time in half,” Housing Minister Clare O’Neil said. “We’ve got a big goal to build 1.2 million new homes in five years and to reach that we need to build homes in new ways – using methods like prefab we can build homes up to 50% faster.”
Another significant feature of the budget is the introduction of a foreign buyer ban, which prohibits overseas investors from purchasing existing homes until after April 2027.
A total of $5.7 million has been allocated for enforcement, with an additional $8.9m to prevent land banking by foreign investors.
“We are easing pressure on the housing market by banning foreign investors from buying established homes, and cracking down on foreign land banking as well,” Chalmers said.
Property Council chief executive Mike Zorbas critiqued the budget’s approach, labeling it as “nothing more than a pre-game warm-up” for the upcoming election.
Zorbas highlighted the need for regulatory reforms, particularly concerning foreign investment.
“Largely this budget tells us we have maxed out the national credit card,” he said. “More than ever over the next few years we need to strip out FIRB and ACCC red tape and state surcharges on foreign investment to welcome investment from overseas to help build the commercial, industrial, and residential assets our cities need.”
REIA president Leanne Pilkington welcomed the government’s efforts on housing but emphasised that more is needed for sustained affordability improvements.
“Although these economic indicators suggest stability, the path to sustained improvements in affordability requires ongoing government intervention and collaboration with the industry,” Pilkington said.
She praised the expansion of the Help to Buy scheme and increased support for modular home construction but stressed the necessity for more fundamental reforms.
“Key initiatives supported by REIA include an $800 million expansion of the Help to Buy scheme, increased funding for social and affordable housing, and backing for prefabricated and modular home construction,” Pilkington said, adding that “while these measures provide immediate relief, long-term structural reforms are needed to improve rental supply and the overall sustainability of housing supply.”
Mark Haron, executive director of Connective, also responded positively to the budget’s initiatives, particularly the expanded Help to Buy Scheme.
“The federal budget was predictably measured, with a focus on providing some relief for Australians, proposing marginal tax breaks rather than significant new spending,” Haron said.
He praised the government’s efforts to lower barriers for first-home buyers and enhance financial flexibility, crucial in times of high cost-of-living pressures.
“The expansion of the Help to Buy Scheme is a step in the right direction, and will assist more buyers by lowering deposit hurdles, while higher income caps make the scheme accessible to more individuals, couples, and families,” Haron said, underscoring the critical role brokers play in this landscape.
MFAA CEO Anja Pannek noted the lack of announcements regarding the Home Guarantee Scheme but welcomed “continued support for buyers including first-home buyers to enter the market, to own a home and to build a secure financial future with the assistance of their mortgage broker.”
For more insights, read the commentaries from PropTrack, Ray White, and Mortgage Choice.
