Melbourne auctions: Uncapped first-home scheme sparks frenzy

Melbourne’s auction market is heating up as an uncapped first-home buyer scheme collides with spring supply.

More than 1000 Melbourne homes will go under the hammer this weekend as a new first-home buyer scheme gives young Australians fresh hope of cracking the market.

Exclusive PropTrack figures show 1070 auctions are scheduled across the city — down 4 per cent on the same weekend last year — with experts warning demand will sharpen at the affordable end as government incentives collide with spring supply.

PropTrack senior economist Angus Moore said the uncapped expansion of the First Home Guarantee was unprecedented.
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“Last year every one of the 50,000 places was taken up,” Mr Moore said.

“Now it’s uncapped, a first at federal level, the government expects another 20,000 people could take it up, but it could be more.

“We don’t have a benchmark for a policy like this.”

While official modelling points to a modest price effect, Mr Moore said the impact would be felt where first-home buyers were most active.

“Yes, it will push prices up. The 0.5 per cent government estimate feels conservative,” he said.
“The sharper effect will be in entry-level suburbs where competition is already strongest.”

Rhett Simonds says young Australians need steady, sustainable demand, not a market sugar rush.

Builders say enquiry has lifted since the July changes, Simonds Homes chief executive Rhett Simonds said young buyers had been locked out for years.

“Every little bit helps,” Mr Simmonds said.

“We don’t want a sugar rush that overheats the market. Slow and steady demand is far healthier.”

Mr Simonds said finance remained the toughest barrier.

More than 1000 homes will go under the hammer in Melbourne this weekend. Picture: NCA NewsWire / Ian Currie

“Affordability and borrowing power are the hardest hurdles,” he said.

“It’s their life savings we’re being entrusted with, and that’s not just a transaction, it’s their future.”

Auction numbers are expected to build further in the weeks ahead, with 1278 homes scheduled for next weekend — up 6 per cent year-on-year.

PropTrack economist Angus Moore says uncapped incentives will push prices higher where first-home buyers are already battling.

Mr Moore said this weekend’s tally was healthy despite the dip.

“Over 1000 auctions in a weekend is solid,” he said.

“Last year was unusually strong, so the small fall this year is more about how busy 2023 was than weakness now.”

Late October and early November are tipped to be the busiest weeks of spring.

The First Home Guarantee has been expanded and uncapped, opening doors for thousands of new buyers. Picture: Asanka Ratnayake/Getty Images

The PropTrack senior economist said the scheme would not fix affordability long term, but combined with rate cuts it would give activity a meaningful lift.

“We’re forecasting steady growth in Melbourne over the next 12 to 18 months,” Mr Moore said.

“The scheme won’t radically change the market overall, but it will add pressure where first-home buyers are most concentrated.”

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