May 2025 Newsletter – Post Election Update
Welcome to our special post-election special newsletter detailing the Labour governments plans and policies around housing affordability and the impact on the property market and you. Also, an update on the outlook for the RBA’s next meeting.
First Home Guarantee Scheme
In some good news for first home buyers the existing First Home Guarantee Scheme will be expanded from Jan 2026. Link for more info. This includes:
- Income limits to be abolished. Previously $125k for individuals and $200k for couples
- Price limits on eligible properties will be lifted. Now $950k for Melbourne up from $800k
- No participant limits. Previously was restricted to 30k participants a year
This scheme has already been accessed by dozens of our clients and so this is a welcome change to ensure many more can enjoy the benefits of home ownership.
A reminder that this scheme allows clients to purchase a home with just a 5 per cent deposit without having to pay Lenders Mortgage Insurance (LMI) or the higher interest rates associated with the LMI loans. Note as well as the 5% deposit you will need to have the $$ to cover stamp duty. See worked example below:
- Purchase of $950k
- Loan of $902.5k (95% of purchase price)
- Cash required:
- 5% deposit = $47.5k
- Stamp duty and transaction costs = $57k
- Total savings required = $104.5k
More Housing Supply
The government has committed 10 billion to build 100,000 homes over eight years, and these will be exclusively for first home buyers to purchase. Overall, the idea of reducing competition for first home buyers sounds great, but we will wait for more detail from the government on this one as to how it will be rolled out before we work out how effective it will be. Link for more info.
HECS Reduction
While not specifically a housing focussed policy it is something that will have a positive impact on clients who are looking to buy. As of June 1, HECS will be reduced by 20%. Link for more info.
Cash Rate
The ASX are calculating that there is a 56% chance of a 0.50% rate reduction at the RBA’s next board meeting, which is on 20th May 2025. I am going to guess something a little different and that is a 0.35% rate cut to move the cash rate to more conventional 3.75% rather than 3.60%. Link for more info.
Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.