The federal government's Home Guarantee Scheme is set to expand, nearly doubling the number of affordable homes available to first-time buyers. According to recent data from Cotality, the increase in price caps to $1 million or more in certain capitals, effective next month, is expected to significantly benefit buyers who have previously been locked out of the housing market.

Cotality's September housing report reveals that under the previous price caps, only about one-third of the 4,848 house and unit markets analyzed nationwide had a median value below the respective limits. However, with the new, higher caps, this figure is projected to rise to 63.1 percent, which includes 51.6 percent of house markets and 93.7 percent of unit markets.

The expanded Home Guarantee Scheme, which will take effect on October 1, allows buyers to bypass lender's mortgage insurance, which typically requires a 20 percent deposit. Instead, the government will act as a guarantor for 15 percent of the loan, enabling more Australians to purchase homes with just a 5 percent deposit.

Significantly, the new rules eliminate previous income limits. Previously, couples were excluded from the scheme if their combined income exceeded $200,000, while singles had to earn less than $125,000 to qualify. These income caps will no longer apply.

Cotality economist Kaytlin Ezzy noted that the new price caps are a substantial increase for most regions and are intended to align more closely with each area's median house values. For instance, in Sydney, the Illawarra, and the Newcastle and Lake Macquarie regions, the cap has risen by $600,000 to $1.5 million.

Ezzy emphasized that the new settings will provide first-time buyers with greater options, particularly for those without financial support from family. "The increased price caps mean first home buyers will have more choice where they can purchase," she said. "Previously, a lot of houses were out of their reach."

Brisbane experienced the largest proportional increase for units, with 97.5 percent of suburbs now qualifying, up from just 36.9 percent. In Adelaide, the number of qualifying suburbs for houses increased dramatically, with 46.6 percent now eligible, compared to only 2.9 percent previously.

While the scheme is expected to stimulate demand, Ezzy cautioned that it could also exert upward pressure on property values. "This will be more equitable and help more people get on the property ladder," she stated.

Under the old caps, first-time buyers in Perth had access to only two suburbs with median house values under the $600,000 limit. The new caps will provide significantly more options in cities like Brisbane and Adelaide, where previously only a small percentage of suburbs qualified.

Ezzy also advised potential buyers to be cautious, urging them to "only borrow what you can afford to pay off." She noted that while the new caps open up more opportunities, buyers still need to qualify for the loans, and lenders are expected to maintain their lending standards.