Differing from previous months, we are taking a brief hiatus from our location profiles and dipping a toe into providing commentary about current events and how they may impact (or benefit) property investors for the remainder of 2025. Let’s dive in.
The Australian Federal Budget for 2025-2026 introduced several measures aimed at addressing housing affordability and supply, impacting first home buyers, home builders, homeowners, and renters. Here’s a quick recap.
First Home Buyers
The government has expanded the Help to Buy scheme with an additional $800 million, increasing property price and income caps. This allows eligible first home buyers to purchase a home with a deposit as low as 2%, with the government providing equity contributions of up to 40% for new builds and up to 30% for existing properties. This initiative is expected to assist up to 40,000 Australians in purchasing their first home over the next four years.
Additionally, the Coalition has proposed allowing first home buyers to access their superannuation to purchase a home, aiming to further facilitate home ownership.
Home Builders
To support the construction industry and increase housing supply, the government has allocated $54 million to expand prefabricated and modular housing construction. This investment aims to enhance efficiency and reduce costs in the building process.
Furthermore, the Build to Rent tax concessions have been refined to encourage the construction of around 80,000 new rental homes over the next decade, including 8,000 affordable homes. These measures are designed to provide greater security and stability for renters, including stable five-year tenancies.
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Homeowners
For existing homeowners, the budget introduces a number of cost of living measures, aimed at putting money back into the pocket of everyday Australians. This includes a $2.3 billion Cheaper Home Batteries Program aimed at subsidising household battery installations for those with rooftop solar systems. The plan would reduce battery costs by 30%, potentially saving households up to $1,100 annually and encouraging the installation of one million new batteries by 2030. This initiative seeks to reduce reliance on the energy grid while promoting environmental sustainability.
Additionally, the government has announced income tax cuts for individuals earning over $45,000, providing financial relief that may assist homeowners in managing mortgage repayments and other expenses.
Renters
The budget has faced criticism for its lack of direct support for renters, especially given that rental affordability is at its worst level on record. Over a million tenants have been reportedly overlooked, with no additional funding allocated to the Commonwealth Rent Assistance program in this budget.
However, the government’s efforts to increase the supply of affordable rental housing through the Build to Rent tax concessions and the construction of new rental homes may provide indirect benefits to renters in the long term.
So, what does this mean for the rest of 2025?
After a robust performance in 2024, the market appears to be showing signs of moderation. An increase in property listings, especially in Sydney and Melbourne, has provided buyers with more choices, leading to a less competitive environment.
Interest rates remain a pivotal factor. While borrowing costs have risen in recent years, the economy remains relatively strong with low unemployment. The RBA held rates this month (April 2025), however, future rate cuts could enhance borrowing capacity, allowing buyers to invest in higher value or even multiple properties.
With the recent US tariff announcements and the general weakness in the global economy, building pressure may see the impetus to reduce interest rates gather speed over coming months.
And lastly, after significant rent increases during 2023 and 2024, we’ve noticed rental growth is beginning to decelerate. This stabilisation may impact investors who relied on rapid rent hikes to offset mortgage expenses.
All in all, the remainder of 2025 is poised to be a time of moderation and consolidation in the Australian property market. In saying that, external factors may exert influence in unpredictable ways.
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Until next month.
