The 2025 Federal Budget introduces changes that will impact the Australian housing market, including a two-year ban on foreign buyers purchasing established homes and an expanded Help to Buy scheme. Additionally, falling inflation rates could lead to further interest rate cuts, affecting property values and mortgage repayments.
Here’s what you need to know:
Interest rate cuts on the horizon?
Treasurer Jim Chalmers announced that inflation is expected to stabilize six months earlier than previously forecast. If this happens, the Reserve Bank could lower interest rates sooner, increasing borrowing capacity and reducing mortgage costs. This would likely stimulate buying activity and drive up property prices, especially in Melbourne’s real estate market.
Expanded help to buy scheme
More Australians will now qualify for the Government’s Help to Buy shared equity scheme, which covers up to 40% of a new home’s price and 30% of an existing home’s price. Key changes include:
- Higher-income caps: Singles earning up to $100,000 (up from $90,000) and couples earning up to $160,000 (up from $120,000) can now apply.
- Increased price caps: The maximum purchase price has been adjusted to reflect rising home values:
- Victoria: $950,000 (metro), $650,000 (regional)
- New South Wales: $1.3 million (metro), $800,000 (regional)
- Queensland: $1 million (metro), $700,000 (regional)
This scheme helps homebuyers secure properties with as little as a 2% deposit.
Foreign buyers banned from established homes
From April 1st, 2025, foreign residents will be banned from buying established homes for two years. The ban is designed to direct investment into new housing developments and ease pressure on the existing housing stock. The Australian Taxation Office will receive $5.7 million over four years to enforce the policy and crack down on non-compliance.
Boost for affordable housing: modular & prefabricated homes
To address the housing supply crisis, the Government has allocated $54 million to support modular and prefabricated home construction. These homes, which can be built up to 50% faster than traditional homes, offer an innovative solution to affordability and supply shortages.
Financial incentives for trades & apprentices
A new Housing Construction Apprenticeship stream will provide up to $10,000 in incentives for eligible apprentices, helping to combat skilled worker shortages in the building sector.
Cost-of-living relief for families
Additional measures include:
- Income tax cuts: The lowest tax rate will drop from 16% to 14% by 2027, saving the average worker ($79,000 salary) $268 per year.
- Cheaper medicine and bulk-billing incentives
- $150 energy bill relief
What this means for homebuyers & investors
The Budget prioritizes affordability, supply, and market stability. With potential interest rate cuts on the way, an expanded Help to Buy scheme, and a foreign buyer ban, Australia’s housing market could see increased demand and price growth.
Whether you’re a first-home buyer, investor, or seller, these changes will shape the property landscape in 2025 and beyond.
Want to stay informed? Get in touch with your Nelson Alexander office for expert insights on how these policies could affect you.
