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August/26 Victoria Residential

Opening the door to your first home: A guide for Victoria

Buying your first home Current market participation, government grants and eligibility pathways in Victoria

First home buyer new loan commitments in Victoria Annual total number of loans & % share of owner-occupier lending, as at Q1/26

First home buyer activity lifts entry-level prices First home buyer activity in Victoria has remained relatively resilient, supported by demand for affordable housing opportunities and a range of government incentive packages. New loan commitments to first home buyers continue to account for a significant share of owner-occupier lending, despite affordability pressures. Over the past decade, this first home buyer share rose from 26% to be 39% in Q1/26, although slightly retracting from 40% a year ago. Trending 3% higher than a year ago, the number of loan commitments to first home buyers in Victoria tallied to 39,638 in the year to Q1/26, to be the greatest total number on the East Coast. This remained lower than back in 2021 and 2022 when these loans taken out reached 46,161 and 46,056, respectively.

Source: McGrath Research, ABS

Tracking average sales price for lowest 25% of residential values

Regional Victoria houses grew the fastest with 7% to reach an average $532,200, compared to regional apartments which grew 5% to $405,600. Melbourne houses saw a similar uplift in average prices with 5% annual growth to $710,100 in Q1/26, as apartments rose 3% to $480,000. Demand for more entry-level homes has been supported by population growth, constrained supply and improved relative affordability compared with higher-priced segments. Recent tax changes are likely to reduce investor activity going forward, potentially easing competition for entry-level properties with the goal of creating more first home buyer opportunities.

Victoria, by Local Government Area, as at Q1/26

Property values in the bottom quartile of the market recorded solid growth in the year ending Q1/26.

Top 5 local markets ranked by lowest average price for houses and apartments

Victoria, plus % price change of this quartile over the year ending Q1/26

HomeBuilder, the temporary federal construction stimulus grant introduced as an economic response to the pandemic, had lifted loan numbers.

Melbourne Houses

Melbourne Apartments

Reg. Victoria Houses

Reg. Victoria Apartments

Melton

Wyndham

Yarriambiack

Glenelg

$747,100

$566,300

$296,400

$285,900

Wyndham

Brimbank

Buloke

Sth. Grampians

$776,700

$577,600

$320,300

$321,000

Whittlesea

Melton

Hindmarsh

Cent. Goldfields

$837,500

$579,500

$343,500

$327,900

Hume

Maribyrnong

West Wimmera

Nth. Grampians

$853,900

$592,800

$395,500

$351,000

Brimbank

Melbourne

Swan Hill

Ararat

$867,100

$598,300

$396,300

$371,100

Source: McGrath Research

Source: McGrath Research, Cotality

Cost to buy | Victoria What incentives are available across Australia? First Home Super Saver Scheme | FHSSS Eligible buyers can make voluntary super contributions (often at a lower tax rate) then withdraw to help purchase their first home. Up to $15,000 per financial year and $50,000 in total can count towards the scheme; this can be doubled for a couple. FHSSS can complement the First Home Guarantee and Help to Buy.

Which additional state-based incentives are offered in Victoria?

First Home Owner Grant | FHOG Grant of $10,000 is available when the purchase price does not exceed $750,000.

First Home Guarantee | FHG Buy your home to live in within the price cap to be entitled to a deposit guarantee covering up to 5% of the property value. Apply through participating lenders to ensure there is no Lenders Mortgage Insurance (LMI) payable. There are no limits on your annual income or the places available, making the scheme broadly accessible.

First Home Buyer Stamp Duty Concession Established homes No transfer (stamp) duty for established homes valued up to $600,000. Concession transfer duty on established homes valued between $600,001 and $750,000. New homes No transfer duty for newly built homes valued up to $600,000.

Help to Buy equity scheme Buy with a minimum 2% deposit of the property value, with no LMI payable for your home to live in. You share in the home’s equity with the Government, which is 40% for a new home and 30% for an established home, until this is repaid over time or when the property sells. There are eligibility limits on your annual income and only 10,000 places are available each year.

Reduced transfer duty on new homes valued between $600,001 and $750,000. Vacant land When vacant land is purchased to build a new home, the home must be built within 12 months for the following to apply: No transfer duty for vacant land valued up to $600,000. Reduced transfer duty on vacant land valued between $600,001 and $750,000.

Three different paths to first home ownership The cost required to buy your first home varies by property price, eligibility and incentives. Using Oxygen Home Loans calculators, these examples show three potential paths to ownership.

Scenario 1

Scenario 2

Scenario 3

Single professional buys an established apartment in Greater Melbourne

Couple buys a new house-and-land package in Regional Victoria

Essential worker buys a new apartment in Greater Melbourne

Property Price

$600,000

First Home Guarantee

Help to Buy scheme

Deposit Required (5%)

-$30,000

Deposit Required (5%)

-$30,000

Deposit Required (2%)

Stamp Duty

Lenders Mortgage Insurance

Est. Other purchase costs

-$4,000

First Home Owner Grant Est. Upfront Cost

$34,000

$600,000

-$12,000

Est. Other purchase costs

-$4,000

Est. Other purchase costs

-$4,000

First Home Owner Grant

+$10,000

First Home Owner Grant

+$10,000

Est. Upfront Cost

$24,000

Est. Upfront Cost

$6,000

Definitions

Housing Australia The Australian Government’s housing agency responsible for delivering programs which improve housing affordability, increase housing supply and support home ownership. Website: www.housingaustralia.gov.au Australian Taxation Office | ATO The Australian Taxation Office (ATO) is the federal government agency responsible for administering tax laws, including those relating to property ownership and capital gains tax compliance. Website: www.ato.gov.au State Revenue Office The Victorian Government agency responsible for administering taxes, duties, grants and compliance programs across the state. Website: www.sro.vic.gov.au Oxygen Oxygen Home Loans provides mortgage solutions and online calculators that can help first home buyers estimate borrowing capacity, repayments, deposit requirements and purchasing costs before entering the market. Website: www.oxygen.com.au/calculators

Recommendation Engage a qualified solicitor or conveyancer from contract review through to settlement. They can identify potential issues, explain your legal obligations and ensure all documentation is completed correctly. First home buyers should also allow for additional costs such as inspections, legal fees, loan establishment charges and moving expenses, and always confirm their eligibility for grants, concessions and government schemes before committing to a purchase.

Lenders Mortgage Insurance | LMI An insurance premium paid by borrowers with a low deposit (typically less than 20%) which protects the lender, not the borrower, if the home loan defaults.

Guiding you home Michelle Ciesielski National Head of Research McGrath Research www.mcgrath.com.au/research

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