The central bank has stated that the expanded scheme will increase the borrowing capacity of first home buyers, but will likely lead to rising house prices.
The Reserve Bank of Australia (RBA) has outlined that it believes changes to the Home Guarantee Scheme will push housing prices up.
During a public hearing held by the House of Representatives standing committee on economics on Monday (22 September), RBA governor Michele Bullock and other senior central bank officials warned that the expanded Home Guarantee Scheme could lead to higher property prices.
Answering questions on the changes to the deposit scheme when they come into effect on 1 October, Bullock noted the RBA had been monitoring the likely impacts.
“The deposit scheme thing is more a demand side thing. We have done a little bit of work on this,” she said.
The RBA’s assistant governor, Brad Jones, then added: “Most of the estimates out there, including from Treasury, suggest that, almost by definition, because of the way the policy is set up, it will bring forward more purchases and increase the borrowing capacity of first home buyers.
“Our sense is that it could add to overall housing credit in the order of one to two per cent at the very margin, you may see a little more upward pressure on house prices in the short term, recognising that first home buyers account for about 20 per cent of the flow of new housing credit.
“But Treasury have also done some work on medium-term supply response, and their sense is that you will see, over time, an uplift in supply in response to that extra demand as well. And so that will end up dampening the price effect over the medium term.”
Commenting on demand-side policies and their effect on easing the housing crisis, Bullock stressed: “We do really need response on the supply side.”
The government had planned to expand the Home Guarantee Scheme from 1 January 2026, giving all eligible first home buyers access to a 5 per cent deposit guarantee with no income or place caps. The universal guarantee was a key election promise.
However, the start date has now been brought forward to 1 October, when all Australian first home buyers with a 5 per cent deposit can apply for the scheme, while property price caps will also be lifted.
There will also be changes to simplify access to the scheme in regional areas, with the Regional First Home Buyer Guarantee set to be replaced by the First Home Guarantee.
[Related: Industry reacts to Home Guarantee Scheme expansion]
