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While first home buyer lending hit a wall in the first half of 2025, experts say the slump could soon end due to the government’s First Home Guarantee scheme.
Fresh data from Money.com.au has revealed that first home buyer lending “flatlined” in the first half of 2025, rising just 0.2 per cent nationwide. That’s a far cry from the record levels seen during the pandemic property boom.
Queensland and Victoria were the only major states to buck the trend, recording gains of 4.5 and 3.5 per cent, respectively.
Victoria led the nation in owner-occupier activity, accounting for one-third of all first home buyer loans. The total number of Victorian loans lifted 4.6 per cent year on year, while Queensland recorded the fastest growth rate, up 6.1 per cent.
Despite the weak headline result, the market has shown some signs of life, growing 7.6 per cent on last year’s numbers.
Money.com.au property expert Debbie Hays said growth is expected to pick up speed with the expansion of the federal government’s First Home Guarantee scheme.
“The scheme’s expansion will likely boost demand and support continued growth in the first home buyer segment in the short term,” she said.
“But as more first home buyers rush to take advantage of it, competition will intensify and that could end up pushing prices higher and locking out the very group it’s meant to help.”
Not every state is enjoying the same bounce. Western Australia saw a 7.5 per cent drop in first home buyer owner-occupier lending over the year.
Investor activity also fell sharply, down 14 per cent nationwide, with Victoria recording the steepest drop of 18.5 per cent.
NSW continues to dominate the investor segment, accounting for more than a third (35.3 per cent) of first home buyer investor loans.
“Many first home buyers are priced out of Sydney and parts of NSW, which means the only way to get a foot on the property ladder is to rentvest,” Hays said.
“Buying where they can afford and renting where they want to live has become the most practical path into the market.”
Loan sizes have also ballooned, with the average first home buyer owner-occupier mortgage rising 5.2 per cent over the year.
Western Australia recorded the biggest surge in borrowing, with average first home buyer loan sizes jumping 12.5 per cent for owner-occupiers and nearly 14 per cent for investors.
“WA’s affordability advantage is shrinking fast,” Hays warned. “In inflated markets like this, rapid growth in borrowing values points to early signs of affordability strain.”
This story was first published in REB's sister publication, Broker Daily.
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