Shrinking first-home buyer pool hits Victorian suburbs

9 hours ago 1

Victorian first-home buyer demand has plunged by a third since 2021, with Equifax data showing aspiring buyers still in the market are seeking larger loans.

Victorian first-home buyer demand has plunged by a third since the year before Anthony Albanese became prime minister, despite support schemes intended to help them.

Equifax analysis shows new mortgage demand among first-home buyers in Victoria fell 33.34 per cent between May 2021 and May 2026, the steepest fall of any state.

Their share of demand also dropped from 41 per cent to 31.9 per cent.

The fall has come despite expansions to federal and state support measures for aspiring buyers, including low-deposit schemes and stamp duty concessions designed to help purchasers get into the market sooner.
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Equifax’s first-home buyer mortgage inquiry data also shows buyers still in the hunt are asking lenders for bigger loans, with the average Victorian inquiry rising from $601,644 in May 2021 to $685,455 in May 2026.

Equifax chief solutions officer Kevin James said demand for first-home buyer loans had dropped significantly after years of home price growth outpacing wages.

“Prices have outgrown income,” Mr James said.

“The amount first-home buyers have to pay has often increased by more than 35 per cent, but their incomes have not grown by anything close to that.”

Equifax chief solutions officer Kevin James said first-home buyer demand had fallen as home prices outpaced incomes and tighter lending conditions limited borrowing power.

Mr James said the challenge had been made worse by a tougher lending environment, including Australian Prudential Regulation Authority guardrails that made it harder for banks to issue loans to buyers borrowing more than six times their annual income.

“In the past, people had to borrow well above six times their income to get into the market, so the change really restricts what a lot of first-home buyers can purchase,” he said.

The Reserve Bank’s battle with inflation has also had a substantial impact on first-home buyers with the nation’s cash rate, which underpins home loan interest rates, surging from a record low 0.1 per cent in 2021 to 4.35 per cent at present.

Mr James said first-home buyer activity was likely to remain under pressure as buyers weighed up falling home prices, lower auction clearance rates and uncertainty about interest rates.

“First-home buyers are seeing clearance rates go lower, they are seeing home prices move backwards, so they are holding off,” he said.

“There is also scepticism about interest rates. Many first-home buyers have to decide, do you apply for a loan now, knowing rates could go up, or wait to see what will happen.

“Most are waiting.”

Melbourne’s outer growth corridors are recording the highest number of first-home buyer duty concession applicants. Picture: Jake Nowakowski

Melbourne’s outer growth corridors are recording the highest number of first-home buyer duty concession applicants. Picture: Brendan Radke

Separate State Revenue Office data shows the remaining first-home buyer activity is heavily concentrated in Melbourne’s growth corridors.

Postcode 3029, covering Hoppers Crossing, Tarneit and Truganina, led the state with 2072 first-home buyer duty concession applicants in 2024-25.

It was followed by 3064, covering Craigieburn, Donnybrook, Kalkallo, Mickleham and Roxburgh Park, with 2041 applicants, and 3978, covering Cardinia, Clyde and Clyde North, with 1127.

Regional buyers are also running into affordability limits, with PropTrack Market Trends data for June 2026 showing the Geelong region’s median house price was $750,000, exactly Victoria’s upper cut-off for first-home buyer stamp duty concessions.

PropTrack senior economist Anne Flaherty said Victorian first-home buyers were being forced to make bigger compromises on location, property type and space.

PropTrack senior economist Anne Flaherty said price remained the biggest challenge facing Victorian first-home buyers.

“The number one thing of all comes down to the price at which properties are selling,” Ms Flaherty said.

“They’re looking in more affordable suburbs, which might be a little bit further away from where they live, or it might be a smaller dwelling size.

“The compromises have had to get bigger over time for first-home buyers.

“A lot of middle-ring and established suburbs, the prospect of purchasing a house is just out of the question for a lot of first-home buyers.”

The economist said support schemes could help buyers enter the market sooner, but could also push up prices beneath eligibility caps.

“On the one hand, it is good that there are these schemes that help people get into the market sooner,” she said.

“On the flip side, it does push the price of property higher, especially under the price caps.”

But Ms Flaherty said price falls alone would not solve the affordability squeeze.

“It has to be supply,” she said.

“Where we underbuild, prices rise more rapidly, and where we overbuild, prices hold pretty much steady or even decline.”

Where first-home buyers can still get in

Rank	Suburb	Median house price
1	Tarneit	$678,000
2	Truganina	$675,050
3	Hoppers Crossing	$699,000
4	Craigieburn	$710,000
5	Mickleham	$705,000
6	Roxburgh Park	$726,500
7	Clyde	$721,000
8	Clyde North	$752,932
9	Point Cook	$828,000
10	Werribee	$668,000