First-home buyers turn to new builds as rate cut fuels market shift

With the Reserve Bank announcing its second rate cut for 2025, bringing the cash rate down to 3.85% – the lowest in more than two years—first-home buyers are facing both opportunity and pressure. 

On May 20, RBA governor Michele Bullock confirmed the 0.25% cut, a move that offered welcome relief to mortgage holders and boosted borrowing power for home seekers. 

First-home buyer loans rose 5.9% to 125,220 in 2024, nearly matching overall owner-occupier loan growth, according to Money.com.au. With interest rates easing and more buyers using grants and guarantees, FHB loans are forecast to rise a further 6.5% in 2025 to 133,308. 

But as borrowing capacity increases, so too does competition. 

Cash rate cuts and resulting mortgage reductions often fuel home price growth, as lower borrowing costs give buyers more to spend—driving prices higher. 

The resulting optimism can bring more buyers to the table—raising concerns among first-time buyers about getting priced out just as they’re ready to enter the market, realestate.com.au reported. 

Why new homes may offer an edge 

Amid shifting market conditions, FHBs are increasingly turning to the new homes market – where state-based incentives, flexible deposit structures, and time-to-build benefits can reduce upfront pressure. 

Many states offer incentives for buying or building new homes, which – on their own or combined with first-home grants – can significantly reduce a buyer’s upfront costs. 

Buying off the plan can also provide a path forward, allowing buyers to secure a property with a smaller deposit now and save further while construction progresses, realestate.com.au reported. 

What states and territories offer first-home buyers 

realestate.com.au provides a breakdown of the key grants, tax concessions, and incentives available across Australia for first-time buyers looking to build or buy new homes. 

New South Wales 

• $10,000 First-Home Owner Grant (new homes) on builds valued up to $750,000 
• Stamp duty exemption or concession on vacant land up to $450,000 under the First-Home Buyer Assistance Scheme 

Victoria 

• Stamp duty exemption for new builds, regardless of property value (extended to October 2026) 
• $10,000 First-Home Owner Grant for new homes valued up to $750,000 

Queensland 

• Full stamp duty exemption for FHBs purchasing new homes or vacant land (price cap removed) 
• $30,000 First-Home Owner Grant for those building or buying off the plan 

South Australia 

• Stamp duty exemption for FHBs buying land or new homes (no price caps) 
• $15,000 First-Home Owner Grant for eligible builds used as a principal place of residence 

Western Australia 

• $10,000 First-Home Owner Grant for builds valued up to $750,000 
• Stamp duty exemption or concession on land up to $450,000 

Tasmania 

• $10,000 First-Home Owner Grant on new home builds or purchases 
• 50% stamp duty concession for off-the-plan apartment buyers 

Australian Capital Territory 

• Home Buyer Concession Scheme offering savings up to $34,270 (income caps apply) 
• Stamp duty exemption on off-the-plan apartments valued up to $1 million 

Northern Territory 

• $50,000 First-Home Owner Grant – the country’s most generous – for house and land packages 
• Stamp duty exemption under the House and Land Package Exemption (HLPE), available regardless of prior ownership 

Timing, flexibility, and support matter 

With expectations of a warmer property market in the second half of the year, first-home buyers are urged to explore flexible pathways – such as financial assistance, delayed settlements, or staged payments. 

They’re eager to buy – but will renewed market momentum push their dream out of reach once more? 

With the right strategy and state-based support, many are still finding ways to break into the market despite competitive headwinds.