By Suzie Tafolo | Tafolo Realty
First-home buyers are stepping back.
Equifax figures show first-home buyer mortgage demand fell 20.1% in the year to August, the largest annual decline since 2022. Queensland was among the hardest hit, down more than 22%. That’s striking given government assistance is available, and parts of the market have softened.
There’s a gap between the 5% deposit and the other 95%, and pressure is increasingly on that other 95%. The Reserve Bank held the cash rate at 4.35% in August, but lenders aren’t waiting. NAB and ANZ lifted fixed rates recently by up to 0.20 percentage points, with ING and Macquarie following. The next decision falls on 29 September, and markets now lean toward a rise rather than another hold.
Higher rates also affect the assessment rate banks use to set borrowing capacity. Canstar estimates this year’s rises alone have cut it by roughly $35,800 for a single earner and $71,600 for a couple. Same job, same income, same savings, but noticeably less purchasing power than a few months ago.
It’s easy to understand why some buyers are waiting. But from where we sit, showing properties every week, price isn’t really the variable driving that decision; capacity is. Cotality’s data shows price weakness has been concentrated at the top end of the market, while the lower-priced properties first-home buyers actually compete for have held up. So even where prices ease, shrinking capacity can outpace any savings, leaving a buyer no closer to qualifying.
That’s not a reason to give up; it’s a reason to get sharper about the other 95% before you start looking. We always encourage our buyers to sit down with a broker early, not six months ago, and check their numbers against today’s rates before they fall for a property they can no longer finance. It’s worth asking whether you qualify for the 5% deposit scheme too, still uncapped and income-test free. And it’s worth learning from those who got in early: tens of thousands used the scheme from October last year with just a 5% deposit, and rate rises since have pushed up their repayments, while price falls have left some with less equity than they started with. A smaller deposit means a smaller buffer.
We’re seeing that reality play out at our own open homes here in the Redlands every weekend. Buyers are asking about body corporate fees, insurance, repayments and commuting costs earlier in the conversation than they used to, often before price comes up at all. We’re finding some pre-approvals don’t stretch as far as buyers expected, so they’re changing suburb or property type instead. Most haven’t given up. They’re doing the maths.
A 5% deposit gets you to the front door. It’s the other 95% — what you can actually borrow, not just what a property is listed for, that determines whether you can stay. Maybe the real question isn’t how we get more first-home buyers in the door. It’s understanding that for many, it’s not always just about the price. It’s what the bank will lend them to pay for it.
