Summary:

In a recent article for realestateconversation.com.au, McGrath CEO John McGrath revealed new insights into how first home buyers are entering the market in 2025. With investor-first buyers on the rise, government schemes evolving, and preferences shifting between new and established homes, builders who want to stay relevant need to understand what is happening at the ground level. This article unpacks the key takeaways and what they mean for the building industry.

Buying your first home is still a major life goal for many Australians. But as McGrath Estate Agents CEO John McGrath points out in his recent commentary on realestateconversation.com.au, the way first home buyers are approaching the market is evolving fast.

Some choose to build, others favour established properties. Some are even buying their first property as an investment rather than to live in. McGrath writes.

These shifts are backed by data from the NAB Residential Property Survey, which show how fragmented and diverse the modern first home buyer segment has become.

For builders, this is not just interesting commentary. It is strategic insight.

Why new homes are now outpacing established ones

The report shows that new housing now makes up a slightly higher share of first home buyer purchases compared to established homes, 34.2 percent versus 32.8 percent.

One reason is eligibility. First Home Owner Grants are often only available for new construction. Another reason is affordability. House and land packages on the fringe of metro areas are still among the most affordable pathways into ownership.

This preference is strongest in Western Australia, where nearly half of all new home sales during the March quarter went to first home buyers. NSW, Queensland and South Australia also leaned toward new builds, though the margin was smaller.

Victoria stood out as the exception, with more first time buyers purchasing established homes (37.6 percent) than new ones (23.8 percent).

Understanding these state-by-state variations can help builders better align their offering to local market conditions.

A rise in first-time investor buyers

A more surprising insight from McGrath’s analysis is the rise in investor-first buyers, those entering the market with a rental strategy instead of owner occupation.

In NSW, for example, 15.6 percent of new home sales and 10.3 percent of established home sales went to first time buyers purchasing for investment.

This suggests many younger Australians are rethinking the traditional property journey. Rather than buying where they want to live, they are buying where they can afford — and renting elsewhere.

Builders looking to serve this group might need to adapt their products. That could mean:

• Creating lower maintenance homes that suit tenants
  
• Designing floorplans optimised for shared living or dual income
  
• Prioritising locations with strong rental demand
  
  

The role of support schemes

Government support continues to play a critical role in helping first time buyers break into the market.

The First Home Guarantee allows eligible buyers to purchase with just a 5 percent deposit — bypassing costly lenders mortgage insurance and helping more people enter the market sooner, McGrath notes.

Labor’s election promises included expanding the scheme by removing income caps, raising property price limits and making the loan guarantees unlimited.

Still, McGrath acknowledges affordability remains the biggest challenge. Particularly in Queensland, South Australia and Western Australia, where limited stock is pushing prices up.

Some buyers are compromising on location. Others are opting to build new when established homes are out of reach. But high construction costs are still a barrier to many.

So what should builders do?

Despite the challenges, the outlook is not all doom and gloom.

McGrath points to softer interest rates and the expanded First Home Guarantee as factors that will continue to support buyer demand through 2025.

For builders, this is an opportunity to ask:

• Are we creating homes that first time buyers can realistically afford?
  
• Are we educating buyers on finance options like the Guarantee?
  
• Are we tailoring product for both owner occupiers and investor buyers?
  

The modern first home buyer is not one audience — it is several. Builders who speak to just one version may be missing out on others.

Final word

As McGrath summarises, “Aspiring first home buyers should prepare for stronger competition in the marketplace.”

For those building homes for them, preparation is just as important.

Understanding these shifts in buyer behaviour and how they vary between regions, can help developers, marketing teams and sales consultants refine their strategy and product mix.

As the market changes, so too should the way we talk to the next generation of homeowners.

Want to share how your business is helping first time buyers succeed?

Get in touch with The Good Builder to be featured in an upcoming profile or podcast.

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Author: TGB Editorial