Buying a home in Sydney has always been a challenge, but with recent changes to the federal government’s housing scheme, first-home buyers now have more opportunities—though competition is heating up fast.
Dan McNamara, a 30-year-old professional living in Chippendale, has been searching for his first property. With the government’s expanded First Home Guarantee about to launch, he’s decided to move quickly rather than risk being priced out.
“I’d rather compete in the market now than sit back and watch prices climb higher,” he said.
The First Home Guarantee Expansion
Starting in October, buyers on any income level will be able to use the scheme with just a 5% deposit, up to a property price cap of $1.5 million. Unlike previous rounds, there won’t be a cap on the number of spots available.
Economists warn this could drive prices even higher. Dr. Nicola Powell, Chief of Research and Economics at Domain, explained that the greatest impact will likely be on properties under $1.5 million, especially as interest rate cuts improve borrowing capacity and buyer confidence.
“When incentives target first-home buyers, the lower-priced end of the market tends to benefit first,” she said.
What $1.5 Million Buys in Sydney
With Sydney’s median house price now sitting at $1.72 million, and the median unit at $835,000, the $1.5 million limit leaves buyers with options, but also restrictions.
For houses, opportunities lie mainly in Sydney’s outer and middle-ring suburbs, as well as regional areas within reach of the city. Data shows suburbs like Padstow, Northmead, Loftus, Berowra Heights, and Bangor sit right on the $1.5 million median. Other options just under the cut-off include Caringbah ($1.495M) and Wamberal ($1.49M).
For apartments, buyers have far more choice. Units in sought-after suburbs such as Breakfast Point ($1.5M), Kirribilli ($1.477M), North Bondi ($1.46M), and Woollahra ($1.438M) fall within budget. This gives first-home buyers access to some premium postcodes, even if houses remain out of reach.
Challenges Ahead
While the scheme is designed to open doors, it won’t make Sydney’s market affordable for everyone. Analysts warn that lower-income buyers may still struggle, even with government support. According to Canstar, a single buyer would need an annual income of $260,900 to service a 95% loan on a $1.5 million property. For couples, each would need to earn at least $129,300.
Mortgage brokers have already noticed a surge of inquiries from hopeful buyers eager to take advantage of the new rules. Jack Elliott, a specialist broker at Alcove, said many are preparing to act the moment October arrives.
“People want to be ready before prices start to move again,” he said.
The Takeaway
The expanded scheme presents a valuable opportunity for Sydney buyers with a $1.5 million budget, particularly for apartments in well-connected suburbs or houses further out. But as competition increases, so too may prices—making timing and preparation critical for those hoping to secure a property.
