Housing affordability has been front and centre in my conversations with clients and colleagues, especially as both major political parties ramped up efforts during the election to help buyers enter the market.
With the expansion of first home buyer guarantees and shifting market dynamics, I’m seeing a new window of opportunity open for first home buyers-particularly in Melbourne’s established apartment sector.
Policy shifts: First home buyer guarantees and what they mean
The latest government initiative now allows first home buyers to purchase with just a 5% deposit, with the government acting as guarantor for loans above 80% loan-to-value ratio.
This removes the need for lenders mortgage insurance, significantly reducing upfront costs and making it easier for buyers to secure finance. The scheme, previously means-tested and capped at 50,000 places per year, is set to become unlimited and open to all first home buyers, with the Melbourne price cap rising from $800,000 to $950,000 from January 2026.
From our perspective at Wakelin Property Advisory, this policy shift directly addresses the biggest hurdle for many first-time buyers: saving a deposit and covering upfront costs.
With these barriers lowered, I’m often asked whether price growth has outpaced affordability in the segments that matter most.
The apartment market: Undervalued and accessible
Contrary to some perceptions, not all parts of Melbourne’s property market have become unattainable.
When I talk about apartments, I’m referring to older, boutique-style buildings built between the 1930s and 1970s in blue-chip inner suburbs, not high-rise towers in Docklands, Southbank, or the CBD. These apartments are typically found on quiet streets, close to public transport and local retail strips, and often include off-street parking.
Over the past seven to ten years, this segment has seen subdued price growth. Factors such as increased supply, tighter lending after the banking Royal Commission, and pandemic-era investor challenges have all contributed.
As a result, many quality two-bedroom apartments in desirable suburbs remain available for $650,000 to $700,000-well within the new guarantee scheme’s cap.
For first home buyers, this represents a rare alignment of affordability, quality, and government support.
Gen Z: Pragmatic and prioritising property
There’s a clear generational shift underway. Unlike millennials, who often delayed property ownership, we’re seeing Gen Z make it a high priority.
Having witnessed the long-term benefits their parents gained from property, they’re more willing to compromise on their first purchase, viewing it as a step onto the property ladder rather than a final destination.
Demographer Mark McCrindle, whom I’ve spoken to on the podcast, notes that Gen Z buyers are open to starting with smaller, more affordable homes and working their way up.
They’re also keen to maintain their inner-city lifestyle-valuing proximity to friends, amenities, and vibrant neighbourhoods. Boutique apartments in established suburbs offer a way to buy without sacrificing these priorities.
Investors exit, first home buyers enter
Recent policy changes-including higher land taxes, stricter rental standards, and new Airbnb levies-have prompted many investors to leave the apartment market.
I’ve observed this first-hand, with an increase in supply, particularly in the inner suburbs, creating more opportunities for first home buyers to secure quality properties.
As highlighted by local agent Luke Saville, whom I recently interviewed, most apartment vendors today are investors, while most buyers are first home buyers eager to take advantage of the current environment.
This shift is creating a more balanced and competitive market for those looking to enter.
Lifestyle without compromise
For many of the first home buyers we work with, especially those accustomed to renting in the inner city, lifestyle remains a top priority.
The ability to purchase a quality apartment close to work, friends, and entertainment means buyers don’t have to compromise on their social lives or daily routines.
This is a significant departure from the traditional narrative that first-time buyers must move far from the city to afford a home.
On ground case study: Competition heats up
Recent auctions the Wakelin team have attended illustrate the strong demand for quality apartments within the guarantee scheme’s price range.
I mentioned in the last podcast an example that carries over well into this week’s topic. Here we saw five first home buyers competing for a one-bedroom apartment, which ultimately sold for $670,000 – well above the initial quoted range.
In the weeks since, I’ve assisted first home buyers in securing multiple two-bedroom apartments in the same price bracket, both on and off market, each attracting robust competition.
Take home message
Melbourne’s apartment market is experiencing a quiet transformation. With government guarantees reducing barriers to entry, investors exiting, and a new generation of buyers prioritising both ownership and lifestyle, we at Wakelin believe the conditions are ripe for first home buyers to make their move.
For those prepared to act, this could be a rare window to secure a quality property in a blue-chip location-without having to compromise on the things that matter most.
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