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The Morrison Government’s First Home Loan Deposit Scheme  comes into effect on 1 Jan 2020 for individuals earning up to $125,000 pa (or a couple earning up to $200,000 pa) where all purchasers are first home buyers.

This means that first home buyers could buy their new home with as little as 5% deposit without needing  to pay Lenders Mortgage Insurance (LMI) saving them around $10,000 in LMI costs. As an example, to buy a $600,000 home today would require $120,000 to avoid paying LMI; and from Jan 2020, that deposit could be as little as $30,000.

When an increased number of buyers (namely first home buyers) start entering the housing market in Jan 2020, the fundamentals of supply and demand economics dictate that as demand increases, prices must increase.

Could 2000 be the Crystal Ball for 2020

There is little reason why history will not repeat itself. In 2000 when the First Home Owners Grant was introduced in 2000 (after GST was introduced), house prices rose drastically in Brisbane and the rest of Australia. In 2000, there were more buyers competing for entry-level properties ($200k-$300k in 2000 whereas in 2020 an entry level property might be $500k+) and this caused a $200k property to be heavily competed for and eventually sold for $250k. As a result, someone who thought their property was initially worth $250k now wanted $300k or $350k and this pushed the property prices up right across the market. Furthermore, this price rise was fuelled by the low interest rates (4%) available in 2000 relative to the years before.

The conditions in 2020 are looking very similar again – the interest rates in 2019/2020 are lower than they were in 2000 – 2005. Banks are starting to become more willing to lend (compared to one year ago) which will facilitate property demand.

In 2020, when a cohort of first home buyers enter the market, where previously they may not have because they did/do not have a big enough deposit, there is little reason not to see the 2000 – 2005 property price increases as a crystal ball for what’s to come in 2020… especially if sellers who are not in a rush to sell hold off putting their properties on the market in late 2019 so that they can catch the anticipated price increase from Jan 2020.

Article supplied by Joseph Panthradil our Mortgage Broking expert.  You can contact Joe on

Mobile: 0412 302 684 or


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