ISCOVER
South Australia leads the nation as first home buyer interest surges, driven by growing confidence as falling interest rates give borrowers a lift.
The number of prospective first home buyers planning to apply for a mortgage has jumped, as interest rate cuts encourage more borrowers to explore home ownership options.
Research in the Equifax Quarterly Consumer Credit Insights – June 2025 report found that intent to apply for a mortgage among first home buyers grew 9 per cent in the June quarter, with demand strongest in South Australia.
Inquiries through mortgage brokers in the state rose 10 per cent, beating Queensland, the next best-performing state, where they increased 8.2 per cent.
In comparison, growth was 6 per cent in Victoria, 5.6 per cent in Western Australia, and just 3 per cent in NSW.
In a sign that intent to buy is translating into market activity, application demand among first home buyers in June increased 6.9 per cent year on year, the first demand growth in 10 months.
South Australia has emerged as a standout market for first home buyers, with data collected in December 2024 by Money.com.au showing that first home buyer loans accounted for 34.9 per cent of all owner-occupier loans, marking a record-high share for the state.
Speaking to The Adviser, Adelaide-based Jordan Hagicostas, mortgage broker at Aussie, said he was seeing strong demand from those wanting to get on the property ladder.
“I am definitely seeing an influx of first home buyer inquiries, as there is a lot of positive sentiment coming from the government and the Reserve Bank of Australia (RBA) through rate drops and further incentives and initiatives for first home buyers,” Hagicostas said.
“My clients are starting to find avenues into the market that weren’t previously available, or that they weren’t aware of, which has resulted in sustained increases in inquiry.”
Sam Neville, who in May founded Adelaide-based boutique brokerage I am lending, told The Adviser that first home buyers made up the majority of the market she dealt with.
“Activity [amongst first home buyers] since June has been very strong, with a lot of buyers making the decision to move now before the market increases any further,” she said.
Rate cuts spur first-time buyer activity
Falling interest rates, which now stand at their lowest level in more than two years, have helped encourage first home buyers to explore mortgage options in South Australia, according to Neville.
“It gives confidence to buyers that if they can afford the pre-approved loan at the current rate, it might get easier over time instead of harder,” she explained.
“We’ve been through a period over the last three years of increases across the board, so it’s nice to look forward to some of those pressures easing instead.”
Hagicostas added that positive sentiment stemming from regular interest rate cuts was bringing more first home buyers into the market, as affordability concerns eased.
“Previously, when we were seeing regular negative sentiment with interest rates increasing, first home buyers were often fearful to take the leap into home ownership due to perceived higher repayment costs,” Hagicostas said.
The broker noted that falling rates were having the opposite effect.
“Clients are seeing this as an opportunity to get into the market now before further rate decreases come through, which home buyers are seeing as being a driver behind increased competition and decreased housing affordability,” Hagicostas said.
“It is also making lower deposit options more desirable, as these products can often yield higher interest rates. As rates come down, these products become more desirable as their rates become less intimidating.”
Affordability remains biggest home buying barrier
Both Neville and Hagicostas signalled affordability as one of the biggest challenges shutting out aspiring home owners in South Australia.
Neville highlighted that for Adelaide’s $865,000 median house price, a 20 per cent deposit plus fees is $230,000. The figure would mean that if consumers saved $1,000 a week, it would take them 4.4 years to have enough for a house deposit.
“Buyers are dealing with the double whammy of affordability and deposit amount constraints,” she said. “Buyers are seeking ways to leapfrog the savings required, but also balance that with the borrowing power to support larger loans.
“A broker can help them navigate their best option, so they can get into the market sooner and with the most suited loan type.”
Hagicostas added that a major challenge for first home buyers was the imbalance between expectations and reality when it came to what property they could afford.
“Many first home buyers want to buy homes where they have grown up, and due to housing affordability issues, first home buyers need to relocate further away from home to enter the market at an affordable price point,” he said.
Hagicostas stressed that the imbalance often generated a lack of approval from family and that there was a “lack of willingness to sacrifice on land size or property type”, with units and town houses being considered undesirable, particularly if borrowers had grown up in a detached house.
He noted that because of this, brokers needed to educate first home buyers on the best options available to them.
“First home buyers who have been willing to enter the market via what they can afford as opposed to what might be considered their dream, forever home, have seen considerable uplifts in equity, often 20 to 30 per cent in 2 to 3 years, which has allowed them to transition into a more desirable second home,” Hagicostas said.
“First home buyers who have refused to compromise on property type or location and are unable to afford their ideal purchase have seen housing prices grow at a much faster pace than their savings, which has put them further behind.”
[Related: Rate cut buzz sparks rise in first home buyer activity]
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