First-home buyers could find it easier to enter the market over the coming year, with lower interest rates expected to improve affordability and reduce mortgage costs, according to new research from REA Group and CommBank.
The PropTrack CommBank First Home Buyer Report 2025 shows that while affordability remains at its lowest level since 1995, recent rate cuts are beginning to ease the pressure.
REA Group Senior Economist Angus Moore said deposit savings remain the biggest challenge for many buyers.
“Saving for a deposit is the key hurdle for first-home buyers, creating a substantial savings burden. On top of this, record-low housing affordability and tough mortgage serviceability have been significant challenges,” he said.
“Despite these conditions, first-home buyers are finding ways to enter the market. Recent government policies, low deposit loans and Lenders Mortgage Insurance are key enablers helping first-home buyers purchase. Many also seek homes in more affordable areas or purchase semi-detached homes or units to overcome affordability challenges.
“The good news for first-home buyers is that conditions are improving. Interest rates have already fallen from their peak, and further cuts are expected. While home prices are rising, lower mortgage rates will likely help put more homes within reach of first-home buyers”.
Key findings from the report include:
- The average first-home buyer loan-to-value ratio is around 85%, meaning most buy with less than a 20% deposit.
- An average-income household would need 5.9 years to save for a 20% deposit on a median-priced home.
- A typical 25–39 year-old renter household earning $129,000 could afford just 17% of homes sold in the past year.
- Four of the top five first-home buyer hotspots are in Melbourne, where demand is almost double the national average.
- About 6% of first-home buyers over the past five years have chosen to “rentvest”, purchasing an investment property while continuing to rent.
Despite affordability challenges, the report notes there are more first-home buyers active in the market now than a decade ago, showing many are finding creative ways to overcome barriers such as high deposits and serviceability tests
