Despite significant challenges with housing supply, the Australian government’s 2025 budget focused on some changes to the Help to Buy scheme and some funding for prefabricated housing. More negatively, there were active measures to discourage foreign investment, a key part of achieving high levels of housing supply in the past. There were however some welcome changes to training to get more people into trades that assist in home building.
Expansion of the Help to Buy scheme
The Help to Buy scheme is a shared equity program where the Australian Commonwealth government provides first home buyers with 30 per cent of the purchase price of an existing home, or 40 per cent for a new home. First home buyers need to contribute at least a two per cent deposit, and the scheme is capped at 10,000 places annually (40,000 total over four years). Recent changes announced in the 2025 budget will increase income caps from $90,000 to $100,000 for singles and from $120,000 to $160,000 for joint applicants and single parents.
The scheme will also increase property price caps to better align with average house prices in each state and territory. For example, Brisbane’s cap will rise from $700,000 to $1 million, Melbourne’s from $850,000 to $950,000, and Sydney’s from $950,000 to $1.3 million. The government is increasing its equity investment in the program by $800 million (from $5.5 billion to $6.3 billion) to support these changes. The Help to Buy scheme will open for applications in late 2025.
The scheme will be well received by first home buyers that fall within the income ranges and want to buy under the price cap. Overall however, global evidence from similar schemes has shown limited success in improving housing affordability, or increasing supply.
United Kingdom: First Homes Scheme (launched 2021)
The UK’s First Homes program offers new homes at a discount of at least 30 per cent compared to market value. Local first-time buyers can purchase properties through discounted outright purchase with resale restrictions. Early evaluations suggest mixed results. The program has helped some buyers enter the market in expensive areas, but critics point to limited availability and concerns that the scheme primarily benefits those already close to homeownership. The rising interest rate environment since 2022 has also dampened its effectiveness, with fewer than expected participants able to secure financing despite the discounts.
New Zealand: First Home Partner (launched 2022)
New Zealand’s Kāinga Ora housing agency implemented the First Home Partner program, where the government contributes up to 25 per cent of a property’s value for five years, allowing time for participants to buy out the government’s share. As of early 2025, the program is fully subscribed and no longer accepting new applications. Initial data from 2023-2024 shows the program has assisted approximately 1,200 households, below initial targets. While participants report high satisfaction, the scheme faces challenges including limited geographic reach and criticism that it primarily helps those already close to the homeownership threshold rather than addressing broader affordable housing shortages.
Canada: Shared Equity Mortgage Provider (SEMP) Program (expanded in 2023)
Canada received a major funding boost for its SEMP program in 2023, allocating CAD $1.25 billion to help first-time buyers. The government contributes 5-10 per cent of a home’s purchase price as a shared equity stake. Recent evaluations from early 2025 indicate reasonable success with approximately 15,000 households assisted, though uptake has been regionally concentrated in mid-sized cities where housing affordability is less severe. The program has been criticised for having limited impact in the most expensive markets like Vancouver and Toronto where affordability challenges are greatest.
Funding for prefabricated and modular home construction
Additionally, the budget includes a $54 million allocation to support prefabricated and modular home construction, with $49.3 million to help states and territories develop local programs supporting this building method and $4.7 million for a voluntary national certification process to streamline approvals. Prefabricated homes, which are primarily constructed offsite before being assembled at their final location, can reportedly be built up to 50 per cent faster than traditional homes.
This initiative represents a step toward innovation in housing delivery and is a critical part of building homes more affordably. At present, Australia falls significantly behind international best practices in this sector. Countries like Sweden, Japan, and Germany have demonstrated the transformative potential of advanced prefabrication at scale. Sweden’s prefab industry produces over 45 per cent of all new housing. In Japan, major manufacturers have refined modular construction to an industrial science, delivering customisable homes in as little as six to eight weeks from order to occupancy while maintaining high quality standards. Meanwhile, Germany’s prefab sector accounts for approximately 20 per cent of new single-family homes.
More money to train the trades
The 2025 budget introduces a significant initiative to address construction sector workforce shortages through the new Housing Construction Apprenticeship stream. As part of the broader Key Apprenticeship Program, this measure will give eligible apprentices in housing construction trades up to $10,000 in financial incentives throughout their apprenticeships. Starting 1 July 2025, this program aims to encourage more people to enter building trades while helping apprentices with their living costs.
This financial support directly tackles one of the biggest barriers to increasing housing supply – the shortage of skilled tradespeople. By making construction apprenticeships more financially viable, the government is taking a practical step toward developing the workforce needed to significantly boost housing construction across the country. The apprenticeship program demonstrates recognition that fixing housing affordability requires not just funding for housing programs, but also strategic investment in the workforce capacity that underpins the entire construction sector.
Less foreign money to help with housing supply
Included in the budget is a ban by foreign buyers from purchasing existing dwellings for two years, starting 1 April 2025. The government is spending $5.7 million on enforcement through the Australian Taxation Office. This policy works against the government’s own goal of building 1.2 million new homes. Foreign investment has historically been crucial for financing new housing developments that might otherwise never be built. The budget also allocates $8.9 million to prevent land banking by foreign investors. While these measures aim to help Australian buyers, they could actually worsen housing shortages by removing a major source of development funding. This approach contradicts successful international strategies that use foreign investment to increase housing supply rather than restricting it. The two-year timeframe suggests this is a temporary measure, but its impact on housing supply could be significant if domestic capital isn’t able to fill the gap left by foreign investors.
As I outlined earlier in the week in my industry wish list, the 2025 budget missed crucial opportunities to comprehensively address Australia’s housing challenges. While the new Housing Construction Apprenticeship stream is a welcome step toward addressing workforce shortages, the budget still failed to deliver on other essential support for the construction sector such as targeted tax incentives or expanded skilled migration pathways for construction professionals. There was no substantial funding increase for the ambitious 1.2 million homes initiative, leaving questions about how this target will be achieved without additional capital investment. Foreign investment specifically should be welcomed instead of discouraged to achieve this goal. The budget also overlooked opportunities to encourage downsizers through expanded superannuation contribution schemes or stamp duty reforms that could free up larger family homes. Additionally, there were no funds to ensure a comprehensive green energy retrofit program for existing housing stock.