In good news for first-home buyers looking for an affordable entry point to the property market, 2024 saw national property values fall for the first time in nearly two years, according to CoreLogic data.
Capital cities like Melbourne and Hobart led this decline. Melbourne is now sitting behind Darwin and Hobart as the nation's third most affordable capital city, with a median home price of $774,093.
But will prices continue to remain in favour of first-time buyers in 2025?
We chatted with the experts to get their top tips and predictions for this year's first-home buyer market.
6 things to know as a first-home buyer in 2025:
1. Government incentives
If you're looking to break into the property market this year, you may be eligible for various government incentives to help you purchase your first home with a smaller deposit.
The federal First Homeowner Grant (FHOG), which provides $10,000 to first-home buyers who buy or build a new home valued up to $750,000, will soon be replaced with the federal Help to Buy scheme.
This new scheme will provide shared equity home loans to eligible buyers with a deposit of at least 2 per cent, meaning the government would act as an equity partner owning 30 to 40 per cent of the property, with its share expected to be paid back if you sell down the track.
The Help to Buy scheme is available for citizens with an annual income of $90,000 or less for individuals or a combined income of $120,000 for couples. The property's purchase price cap varies by state.
The Labour government will offer ten thousand places for the Help to Buy scheme each year.
Other incentives include the First Home Super Saver (FHSS) scheme, which allows you to make personal voluntary contributions to your superannuation fund to help you save for your first home deposit with a 30 per cent FHSS tax offset.
This allows you to withdraw up to $15,000 of your voluntary contributions from any one financial year or a total of $50,000 across multiple years.
The federal First Home Guarantee (FHBG) will also allow eligible first-home buyers to buy a home with a deposit of as little as 5 per cent without paying Lenders Mortgage Insurance (LMI).
The guarantee is available for those earning up to $125,000 for individuals or $200,000 for joint applicants, with property price caps varying by state.
Other state government incentives are available depending on the state you're looking to buy in.
Read more: Buying property with a special someone in 2025? Read this first
2. Get in while the market is on a downswing
CoreLogic Head of Research Eliza Owen noted that now was a good time to buy due to falling property values in many capital cities.
However, property prices are lower due to interest rates remaining high, which could be a barrier for first-home buyers as mortgage repayments will be more expensive.
National Property Buyers director Antony Bucello added that the first quarter of 2025 would likely be a good time to buy before interest rates are expected to fall again, meaning you can break into the market in a sweet spot where prices are low. Still, repayment costs might ease in the near future.
"It's a small window, but I do generally think that we've got a window of maybe six months," Mr Bucello said.
"Even if we do see a rate drop in March or April, I don't think that will filter through until the second half of the year."
Read more: 'Short and sharp': the expert's forecast on house price drop
3. Investors are likely to return
Ray White Chief Economist Nerida Conisbee also highlighted that early 2025 was a good time for first-home buyers to look at purchasing property due to many investors having dropped out of the market as a result of low capital gains, plus rental reforms and added land taxes for investment properties in states like Victoria.
"Investors are selling out which is good news as they buy similar stuff to first-home buyers," Ms Conisbee said.
Mr Bucello echoed that the exodus of investors, particularly in cities like Melbourne, where values have fallen significantly, will benefit first-home buyers by introducing more supply for homes under $800,000 - a typical price point for first-timers.
"I think first-home buyers are going to be a very active buyer type in 2025," he said.
"If they have the capacity and ability to buy, I generally believe 2025 is a good time to get going."
Read more: The most important seven things to know as a property investor in 2025
4. Less stock on the market
Although there was more available stock for affordable houses due to fewer investors in the market, Ms Owen said that a cheaper market also meant fewer sellers were offloading their homes.
"Buyers could benefit from price falls, which are starting to play out, but the tradeoff is if selling conditions worsen and as prices fall, sellers might hold off," she said.
However, some particularly good buyers markets are now worth looking into due to declines in values and stock levels remaining relatively high, according to Ms Owen.
This includes Melbourne, where values are down about 6.5 per cent below the peak, buyer negotiating power is much stronger than it was a few years ago, and Hobart, where values have fallen even further - about 13 per cent below the peak.
5. Don't forget serviceability buffers
The mortgage serviceability buffer determines your borrowing power by your ability to repay your mortgage at three per cent above your loan rate to account for interest rate changes.
This buffer remains a challenge for first-home buyers due to decreasing their borrowing power, so it's important to consider this when seeking a home loan.
6. Take advantage of income growth
With inflation easing due to higher interest rates over the past two years, Australians could see real income growth this year.
Ms Owen said higher wages could help first-home buyers build up their savings in the year ahead, which would increase housing demand.
However, if demand does increase, this would mean property prices would likely rise again, and competition would increaseboth barriers for those looking for their first home.
