The RBA’s latest Senate hearing highlighted both opportunities and risks for new home buyers. Governor Michele Bullock noted that the expanded First Home Guarantee (now allowing purchase with just 5% deposit and no lenders’ mortgage insurance) will bring many more first-home buyers into the market. However, she warned this also means more borrowers with high loan-to-value ratios – and if prices ease, some could end up in negative equity. RBA analysis emphasises that the chronic housing shortage, not interest-rate policy, is driving recent price risesabc.net.au. In fact, Bullock conceded the supply squeeze is likely to persist for at least two more years.
While media coverage focuses on the cautionary notes, experienced buyer agents see a silver lining for new investors. Many long-term property owners are now selling. Industry surveys show record numbers of landlords exiting the market – one finding 16.7% of investors sold at least one property this year, up from 14.1% last year. Key reasons include rising holding costs, higher land taxes and uncertainty over reforms. In short, investors who bought at peak prices are choosing to cash out while they can. This shift means more homes coming onto the market and better leverage for active buyers. Every extra listing adds supply, widening choice and bargaining power – especially in Brisbane and Melbourne where investor sell-offs are strongest.
Key considerations for new buyers:
- First-home guarantee drives competition. The 5% deposit scheme lets new buyers enter with little upfront cash. That means fierce competition for entry-level homes. While we encourage first-home buyers to use the scheme, we also stress careful budgeting. Borrowers should be wary of maxing out their loans because higher repayments are likely.
- Housing shortage fuels prices. The RBA reminds us that the real issue is supply, not rate cuts. With demand strong and supply tight, prices could stay elevated. We guide buyers to focus on suburbs with genuine fundamentals (employment, infrastructure, growth potential) so a short-term spike won’t derail the investment.
- Investor activity adds complexity. Many investors are returning as borrowing costs ease, adding pressure in the affordable segments. But at the same time, an unprecedented exodus of long-term landlords is taking off-market stock out of the rental pool. This paradox means more homes for sale – a net positive for buyers – but also more competition from cash-ready investors in choice locations.
- High-LVR caution. Buying with only 5% down increases risk. If prices plateau or fall, heavy borrowers could struggle with repayments. As buyer agents, we stress running scenarios on repayments and leave a buffer. Getting professional advice on loan structure (including serviceability tests for higher debt levels) is critical.
- Buyer-agent expertise. In this market, an experienced buyer’s agent is more valuable than ever. We help clients avoid over-extending and pinpoint deals in safer pockets. By monitoring sales from investor sell-offs and matching them to buyer briefs, we uncover opportunities others might miss. Our role is to negotiate smartly and lock in sustainable purchases, rather than chasing every hot listing.
Every market shift has winners and losers. The combination of an easing interest-rate cycle and policy changes means today’s buyers have a chance to act strategically. More stock on the market (thanks to exiting investors) can bring prices into better balance. At the same time, we remain mindful of the RBA’s caution that these are not “risk-free” waters – high-LVR borrowing needs care.Ready to make your move? For tailored advice or to discuss your buying strategy, contact Investmate. Feel free to call us at +61 421 942 049 or book a free consultation today. Investmate is here to guide you through these changing conditions and help you secure the right property in this market.
