Introduction

Australia’s housing market is undergoing significant change in 2025, driven largely by first-home buyer incentives and new government policy reforms. With affordability challenges persisting, the government has rolled out new measures such as 5% deposit schemes, increased property price caps, removal of income caps, and shared equity support.

While these initiatives are designed to help Australians achieve the dream of home ownership, they also have a major impact on how properties are valued, taxed, and assessed. From Stamp Duty implications to Capital Gains Tax (CGT) outcomes and even Family Law property settlements, these policy changes are shaping the way professional valuers approach property markets.

Key First-Home Buyer Incentives in 2025

1)   The Home Guarantee Scheme (5% Deposit Loans)

       From October 2025, first-home buyers can purchase with just a 5% deposit, without paying Lenders’  

       Mortgage Insurance (LMI). This opens the door for many Australians who previously struggled to save

       for a 20% deposit.

2)   Removal of Income Caps & Expanded Eligibility

       Previously, only those under strict income thresholds could apply. Now, all first-home buyers are eligible,

       widening the buyer pool dramatically.

3)  Higher Property Price Caps

      Price caps are being lifted across Australia to match current market conditions—for example, in Sydney,

      The cap has increased from ~$900,000 to around $1.5 million. This significantly expands the range of

      eligible properties.

4)  Shared Equity Programs & “Help to Buy”

      Under shared equity schemes, the government contributes a percentage of the purchase, lowering

      upfront costs. This makes it easier for buyers to enter the market and improves affordability.

Broader Market Challenges

While first-home buyer reforms are positive, there are also challenges:

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  1) Risk of Overvaluation: A surge in demand could lead to overvalued properties in some regions, posing risks for both buyers and lenders.

2) Supply Constraints: If housing supply does not grow in line with increased demand, prices may rise faster than incomes, creating affordability issues.

3) Regional Market Pressures: Policies may shift demand into suburban or regional markets, leading to valuation spikes in previously stable areas.

Impact on Property Valuations

These reforms do more than help buyers—they actively influence market assessments and property valuations across the country:

•    1)  Inflation in Targeted Price Bands
          Areas where properties fall just under new price caps are likely to see heightened competition, leading

          to higher valuations.

•    2) Valuer Adjustments
          Professional valuers must factor in these new incentives when preparing valuation reports, especially

          for lenders. A surge in eligible buyers shifts demand dynamics, which needs to be reflected in valuations.

• 3)    Stamp Duty & Capital Gains Tax Implications
          Higher purchase prices mean higher Stamp Duty for buyers. And when those properties are sold later,

          Higher valuations may increase Capital Gains Tax (CGT) obligations for sellers.

• • 4)    Increased Buyer Demand
           With fewer financial barriers, more buyers are competing in the market. This rising demand is likely to
  •        push up entry-level property prices in eligible suburbs.
• • 5)   Family Law Considerations
          In Family Law property settlements, valuations must be accurate and current. With incentives affecting
  •       Demand and pricing, family property division cases must consider these market influences.

Conclusion

First-home buyer incentives in 2025 represent a turning point in Australia’s property market. While they provide life-changing opportunities for thousands of new homeowners, they also create valuation challenges that must be carefully managed.




From Stamp Duty and Capital Gains Tax implications to the role of a valuer in market assessments and even Family Law settlements, these changes show just how deeply policy reforms shape the property market.