Contrary to what you often hear in the media or political debates, the buyers getting the biggest tax and financial advantages in Australia right now aren’t property investors. It’s first home buyers (FHBs) who are heavily favoured by the system – and their boosted activity is actually helping push property prices higher in many areas.
Right now, FHBs are super active in the market, thanks to a stack of government incentives at both federal and state levels. These perks give them a massive edge that other buyers – especially investors – simply don’t have.
Here are the key advantages FHBs enjoy:
- Super-low deposit requirements: Through the Australian Government 5% Deposit Scheme (expanded in late 2025 with no income caps or place limits), eligible first home buyers can buy with just 5% down – and crucially, the government guarantee means no Lenders Mortgage Insurance (LMI). Single parents or legal guardians can go even lower, at 2%. Compare that to investors or other buyers, who typically need 20% to avoid LMI or face thousands in extra insurance costs.
- State-level grants and stamp duty relief: Many states offer cash grants (like the First Home Owner Grant for new builds in some places) and big stamp duty exemptions or concessions – often saving buyers tens of thousands upfront. Investors get zero grants and pay full stamp duty.
- Ongoing tax breaks: When FHBs own and live in their home, they pay no land tax, no capital gains tax on sale (as it’s their principal place of residence), and often lower council rates compared to investment properties.
Investors, on the other hand, foot a huge bill: land tax, full stamp duty, capital gains tax when selling, higher council rates, and more. Collectively, “mum and dad” investors contribute billions annually through these taxes and provide over 90% of Australia’s 3.5 million rental homes.
I am certainly not arguing against helping first home owner – they deserve (and need) support to achieve the dream of home ownership. But the narrative that stripping tax benefits from investors (like negative gearing or CGT discounts) will magically fix the housing crisis is also misguided in my opinion. Those changes would likely reduce rental supply, hurt tenants with higher rents or fewer options, and do little to address the real drivers of affordability issues.
The current incentives for FHBs are powerful and are clearly fuelling demand and competition in the market. If we’re serious about affordability, we need a balanced conversation that looks at supply, planning restrictions, construction costs, and how all buyer groups interact – not just pointing the finger at one side.
What do you think? Are these FHB schemes helping more people buy, or are they unintentionally inflating prices further? Drop your thoughts below – keen to hear perspectives from buyers, investors, renters, and everyone in between.
And if you want to know more about the incentives available to First Home Buyers, reach out for some more information.