Home Buying in Australia 2025: First Home Buyers & Upgraders

Buying a property in Australia can be a complex journey, especially for first home buyers and upgraders aiming to make their next move. The process in 2025 follows a similar blueprint as in years past, but there are new market conditions and government incentives to consider. This step-by-step guide will walk you through the Australian property buying process from start to finish, highlighting key tips for both first-timers and those upgrading to a new home. We’ll maintain a focus on 2025-specific factors (like market trends and updated schemes) to help you navigate with confidence and minimal stress.

Quick overview:

• First Home Buyers: You may benefit from programs that allow purchasing with a low deposit (as little as 5%) without lender’s mortgage insurance. Be sure to take advantage of any first-home owner grants or stamp duty concessions available in your state.
  
  
• Upgraders: If you’re looking to sell and then buy (or vice versa), 2025 could be an opportune time. Experts predict that anticipated interest rate cuts and increasing listings will boost buyer borrowing power and choice in the marketbrokernews.com.au. It’s important to decide early whether to buy first or sell first based on your finances and risk tolerance – each approach has pros and cons.
  
  

With that in mind, let’s dive into each step of the buying process in detail.

Step 1: Assess Your Financial Situation and Budget

Determine what you can afford. Start by reviewing your savings, income, and expenses to figure out how much you can allocate to a home purchase. This includes calculating your deposit and factoring in purchasing costs like stamp duty, legal fees, inspections, and moving expenses. If you’re a first home buyer, check if you qualify for assistance such as the First Home Owner Grant (FHOG) or stamp duty exemptions in your state. Also explore federal schemes: for example, the First Home Guarantee allows eligible buyers to purchase with a deposit of only 5% without paying LMI (Lenders Mortgage Insurance). These programs can significantly lower the upfront cost of buying your first home.

Review your borrowing capacity. Use online calculators or speak with a mortgage broker to understand how large a loan you could get. Lenders consider your income, debts, and credit score to determine your borrowing limit. As a rule of thumb, ensure your expected mortgage repayments would be comfortable against your current budget – you don’t want to end up “house poor.” Keep in mind interest rates in 2025 may change. Currently, rates have stabilised after recent rises, but any future rate cuts could increase your borrowing capacity (good for buyers)  (source: brokernews.com.au). However, never overstretch; plan for potential rate rises too, to be safe.

Upgraders – consider your existing equity and loans. If you already own a home and are upgrading, your financial picture is a bit more complicated. Determine how much equity you have in your current property (its market value minus any remaining mortgage). This equity can potentially be used towards the deposit on your new home, either by selling the current property or via a home equity loan/line of credit. Also, check with your lender or broker about bridging finance options. A bridging loan could allow you to buy a new property before selling your old one, but comes with higher interest and the challenge of holding two loans briefly. Weigh these factors carefully and consult a financial adviser if needed.

💡 Tip: Setting a clear budget is crucial. It’s wise to have a little buffer in your budget for unexpected costs. And if you’re upgrading, decide early whether you intend to sell your current home first or buy your new home first – this decision affects your budget and risk. (We’ll discuss the buy-first-vs-sell-first dilemma more in Step 2.)

Step 2: Arrange Mortgage Pre-Approval

Why get pre-approved? Obtaining a loan pre-approval (also called conditional approval) from a bank or lender is an important early step. Pre-approval is essentially a lender’s in-principle agreement of how much they’re willing to lend you, based on a preliminary assessment. While not a final guarantee, it gives you a confident price range to work with and makes you a more credible buyer to real estate agents and sellers.

How to get pre-approved: You can approach a lender directly or use a mortgage broker to shop around for the best deals. Provide documents like proof of income (payslips or tax returns), savings, employment details, and lists of debts or expenses. The lender will conduct credit checks and evaluate your financial health. Once approved, you’ll receive a pre-approval letter stating the maximum loan amount. Pre-approvals typically last 3–6 months, giving you time to house-hunt within that window.

First Home Buyer considerations: While seeking pre-approval, enquire about any special first-home-buyer loans or incentives your lender might offer. Some lenders have tailored packages for FHBs, such as slightly discounted rates or fee waivers. Also, if you plan to utilize a government low-deposit scheme or grant, inform the lender so they can factor that into the loan structure (some schemes have specific lender panels or additional paperwork).

Upgrader considerations: If you’re upgrading, pre-approval can be tricky if you haven’t sold your current home yet. The lender will account for your existing mortgage in your serviceability assessment. This is where the buy-first vs sell-first strategy comes into play. If you choose to buy before selling, the bank might approve you conditional on being able to carry both loans or on securing a bridging loan. This requires strong finances. On the other hand, if you sell first, you’ll know exactly how much equity (cash) you have from the sale to put toward the new purchase, which can make obtaining a loan easier and less stressful. Many upgraders in 2025 are leaning toward selling first to solidify their budget, especially in a market where listings are on the rise and buyers have more choicebrokernews.com.au. Discuss these scenarios with your broker or lender. They can also help you with contingency plans (like bridging finance or extended settlement periods) depending on which route you take.

💡 Tip: Pre-approval is not the final loan contract. Avoid making major financial changes (like taking out new loans or changing jobs) during your home search, as this could impact your official approval later. Also, don’t feel obligated to borrow the absolute maximum the bank offers – stick to what you’re comfortable repaying.

Step 3: Research the Market and Decide What to Buy

With a budget in mind (and a pre-approval in hand), you can now focus on what and where to buy:

• Location: Consider which suburbs or areas fit your lifestyle, needs, and budget. First home buyers might prioritize proximity to work or family, or look for up-and-coming suburbs where their money goes further. Upgraders often have more specific requirements (e.g. a better school district, larger land, different city, etc.). Research recent sale prices in those areas to ensure your budget aligns with the market reality. Tools like realestate.com.au, Domain, or CoreLogic reports can provide median prices and trends. In 2025, many markets in Australia have seen price stabilisation, but there are variations – some cities are heating up again, while others remain buyer-friendly. Look at local growth forecasts and infrastructure projects which might influence future value.
  
  
• Property Type: Decide if you want a house, unit, townhouse, etc. First home buyers may be weighing the trade-offs between an apartment (often more affordable) versus a house (more land, no strata fees). Upgraders likely already have preferences based on their current home experience – for instance, upgrading from an apartment to a house for more space, or from an older home to a new build for less maintenance. Each property type has different costs (maintenance, council rates, strata levies for units, etc.), so factor those into your decision.
  
  
• Must-haves vs Nice-to-haves: Make a list of features you need (e.g. number of bedrooms, backyard size, access to public transport) and those you’d like but can compromise on. This will help you evaluate properties more systematically and avoid getting swept up by emotion alone. Upgraders should reflect on what they don’t have in their current home that they absolutely want in the next one (for example, an extra bedroom, a garage, a better layout), as this move is often about improving lifestyle.
  
  

Market research: Stay informed about market conditions in 2025. Check monthly property reports or speak to local real estate agents. If the market is a buyer’s market (lots of supply, slower sales), you may have more negotiating power and time to deliberate. If it’s a seller’s market (limited stock, high competition), be prepared to act quickly when you find a suitable property. Notably, 2025 has been seeing an increase in listings, which is creating more opportunities and choice for buyersbrokernews.com.au. This is great for upgraders who might have been frustrated by low stock in previous years. First home buyers might find a bit less competition on entry-level properties too, although good ones still get snapped up fast.

Professional help: Consider engaging a buyer’s agent if you feel you need expert guidance. Buyer’s agents (like the team at MyPropertyPro) specialize in helping buyers find and secure the right property, often saving time and reducing stress. This can be especially useful for first home buyers unfamiliar with the process or for upgraders searching in a new area or segment of the market. A buyer’s agent can assist with market research, property shortlisting, and even negotiating on your behalf. If you prefer to DIY, just be diligent in your research – attend open homes, track auction results, and soak up as much knowledge as you can about your target market.

💡 Tip: Create a property inspection checklist to compare homes you visit. Jot down pros and cons of each property while it’s fresh in mind. If you’re a couple or buying with someone else (even a friend), ensure you’re on the same page with priorities. And remember, no property is ever “perfect” – aim to tick as many of your essential boxes as possible.

Step 4: Begin House Hunting and Inspections

Now for the exciting part – searching for your new home. With your criteria set, start scouting properties online and in person:

Online search: Use real estate websites and apps to find listings in your chosen areas. Set up email alerts for new listings within your budget so you don’t miss any opportunities. Read listings carefully for details on the property features, inspect photos, and note down open inspection times. In 2025, many listings also include virtual tours or video walkthroughs – take advantage of these for a preview, but always plan to visit in person before making an offer.

Open homes and inspections: Go to as many open for inspections as necessary to get a feel for the market. When inspecting a property, be thorough: test light switches, look for signs of damage or damp, check water pressure, and so on. It can be helpful to bring along a checklist. (For a detailed guide on what to look for during inspections, see our article on How to Inspect a Property Before Buying. Don’t hesitate to ask the real estate agent questions about the property, such as why the owner is selling, how long it’s been on the market, any known issues, and what offers have been made so far (if any).

Shortlisting: After several inspections, identify the properties that best meet your needs and budget. It might help to rank them in order of preference. Keep your due diligence mindset: sometimes a property that seems perfect could hide problems, while one that looks average might turn out to be a gem with a little work. Remain objective and refer back to your must-haves list. If you’re a first home buyer, try not to get discouraged if you don’t find “the one” immediately – the search can take time. Upgraders, you might be balancing selling your current home during this phase, which can be stressful. Stay organized by keeping a calendar of key dates (open houses, your own home sale campaign dates, etc.) to avoid overlaps.

Building a team: As you hunt, it’s wise to line up the professionals you’ll need once you’re ready to act. This includes a conveyancer or property solicitor (to handle legal paperwork and title transfer) and possibly a building and pest inspector. Having these contacts ready means you can move quickly to the next step when you find a property you love.

💡 Tip: If you find a place that checks your boxes, consider doing a second inspection at a different time of day or in different conditions. For instance, an evening inspection might reveal noise issues (like traffic or neighbors) that weren’t obvious on a Saturday morning. Also, if you’re uncertain about anything structural or technical, don’t rely on your own eyes alone – a professional building inspection is worth every dollar for peace of mind.

Step 5: Do Your Due Diligence (Legal and Inspections)

Once you have a top candidate property (or a few) in sight, it’s time to perform due diligence before committing to a purchase. This step is crucial for avoiding expensive surprises down the road.

Engage a conveyancer/solicitor: Obtain the contract of sale for the property (the selling agent will provide this, often via email). Have your conveyancer or solicitor review the contract and any attached documents (like title, zoning certificates, strata reports if it’s a unit, etc.). They will explain any unusual clauses or conditions, and can negotiate contract terms if needed. For example, you might need flexibility on settlement date, or you want certain fixtures included – these can be discussed prior to signing. The conveyancer will also check for any red flags such as restrictive covenants, easements on the title, or council proposals affecting the property.

Building and pest inspection: Especially for houses (and even for older apartments/townhouses), hire a licensed building inspector and pest inspector to thoroughly evaluate the property. They will assess the structure (roof, foundation, walls), look for signs of issues like water damage, termite activity, structural defects or any maintenance that might be needed. The inspector provides a written report on the property’s condition. No property is perfect, so expect some minor findings – the key is to watch out for major problems (e.g. serious structural flaws, unsafe wiring, termite infestations). If a report reveals a significant issue, you might use that information to negotiate a lower price or decide to walk away. First home buyers: it’s easy to get emotionally attached, but let the facts guide you here. Upgraders: you may be more familiar with these reports if you’ve been through it before, but never assume – always get fresh inspections on the new property.

Verify finances: At this stage, double-check your loan status. If it’s been a while since pre-approval or if interest rates have changed, reconfirm with your lender that you’re still good for the needed amount. Also ensure you have your deposit funds accessible (many people use savings or will get funds from selling an existing property). If you’re relying on the sale of your current home for funds, ideally that sale should be under way or completed by now (or you have bridge financing in place). Coordinate with your broker so that once you’re ready to make an offer or bid at auction, the financing will be ready to go.

First home buyer incentives: Before proceeding to purchase, make sure you understand how to claim any incentives you’re eligible for. Some, like the First Home Owner Grant, are applied at settlement (usually through your lender or solicitor). Stamp duty concessions may require an application or at least checking a box in the transfer papers. Your conveyancer and lender will typically help facilitate these, but it’s good to know the process. If using the First Home Guarantee (5% deposit scheme), you should have that application in motion with your lender at pre-approval stage, since spots are limited annually. Essentially, have all your ducks in a row so there are no last-minute hiccups when you’re ready to buy.

💡 Tip: Due diligence can feel tedious, but it’s a vital safeguard. If you’re unsure about interpreting any report or contract clause, ask questions! It’s better to delay a purchase or spend a bit more on expert advice than to rush and regret. Remember, buying a home is one of the biggest financial decisions you’ll make – a careful approach now will pay off in peace of mind later.

Step 6: Making an Offer (Private Treaty) or Bidding at Auction

Once you’re satisfied with all checks and you’re ready to proceed, it’s time to secure the property. The process differs slightly depending on whether the property is being sold via private treaty (asking price or negotiation) or auction.

Private treaty (normal sale): For a private sale, you’ll typically negotiate with the seller (through the real estate agent). Here’s how to approach it:

• Initial offer: Based on your research and the property’s condition, decide on a fair offer. It could be below the asking price, at the asking price, or even above if competition is strong or the property is priced well. Communicate your offer to the agent, usually in writing (some agents have a simple form or email is fine). The offer should include the price and any conditions (e.g. “subject to finance” if you still need final loan approval, or a longer settlement period if you need one). In NSW and many states, private offers aren’t legally binding until contracts are signed, so at this stage you’re indicating your intent.
  
  
• Negotiation: The seller may counter-offer. Commonly, there can be a few back-and-forth rounds on price. Stay firm on your budget ceiling – it’s easy to get caught up in the moment, but remember your financial limit. Negotiation might also involve conditions: for example, if you haven’t done a building inspection yet, you could make your offer conditional on getting a satisfactory inspection report (though it’s better to do it beforehand in a hot market). Work with your conveyancer and agent to adjust terms as needed. Once both parties agree on price and terms, you’ll move to signing the contract.
  
  
• Contract exchange and deposit: In a private treaty, once your offer is accepted, you’ll sign the contract of sale and usually pay a holding deposit (often 0.25% in NSW at this point, or a small initial amount) to secure the deal, entering a cooling-off period (if applicable in your state). The contract is typically conditional during this cooling-off phase (5 business days in NSW, varies by state) which gives the buyer a last chance to back out, albeit losing that 0.25% if they do. After cooling-off, or if you choose to waive it, the sale becomes unconditional and you’ll pay the balance of the deposit (usually totaling 5-10% of the purchase price) as stipulated. At exchange (when both parties have signed and exchanged contracts), the deal is legally binding on both sides, pending settlement.
  
  

Auction: If the property is up for auction, the process is different:

• Do all your due diligence before auction day (there is no cooling-off period if you buy at auction). That means inspections done, contract reviewed (your solicitor can negotiate any changes with the seller’s lawyer prior to auction if needed), and your finance in order. Essentially, be ready to sign and pay deposit on the spot if you win.
  
  
• Set a strict limit for yourself. Auctions can be emotional and fast-paced. Determine your maximum bid in advance – the absolute highest you’d be willing to pay – and stick to it.
  
  
• On auction day, register to bid (bring ID as required by law). During bidding, try to stay calm and focused. You don’t have to bid early; some people wait until the bidding has warmed up. Use a confident, clear voice when bidding. Increment sizes can be suggested by the auctioneer, but you can bid in different increments if you like (within reason).
  
  
• If you’re the highest bidder above the reserve price when the hammer falls, congrats – you’ve bought the property! You’ll be required to sign the contract immediately and pay the deposit (usually 10%) on the spot (often by bank cheque or deposit transfer). The sale is then unconditional.
  
  
• If the property passes in (doesn’t meet reserve), the highest bidder usually gets first right to negotiate with the seller at the reserve price. This is a second chance to make a deal. If you’re in this position and still within your budget, engage in that negotiation – often a sale is made shortly after a passed-in auction.
  
  

Whether private sale or auction, remember as a first home buyer to keep your excitement in check enough to exercise due diligence and not overspend. It’s okay to walk away if the price goes beyond what you’re comfortable with; another home will come. Upgraders might be more seasoned, but if you’re concurrently selling your current home, you’ll have the additional pressure of timing. Try to line up your sale and purchase settlements to avoid double moves or needing temporary accommodation (this isn’t always perfectly achievable, but aim for as much overlap as possible). If you bought before selling and now need to sell, price your current home realistically to avoid undue delay or financial strain of two mortgages.

💡 Tip: After winning a property (offer accepted or auction success), avoid any major purchases or new credit lines before settlement (no sudden car loans or big credit card buys!). Lenders often re-verify your financial position right before settlement. You want nothing to jeopardize your final loan approval.

Step 7: Settlement and Moving In

The final step is the settlement period, which is typically around 4–8 weeks after exchange of contracts (the length should have been agreed upon in the contract). During this time, several things happen in the background:

Finalizing the loan: Your lender will move the loan from conditional approval to unconditional (formal) approval. This involves a valuation of the property by the bank and verifying all your documentation is up to date. Once formally approved, the bank will prepare loan contracts for you to sign. Make sure to sign and return everything promptly to avoid delays. Just before settlement, the bank will also send the funds (your loan amount) to your solicitor or settlement agent, ready for the big day.

Conveyancing process: Your solicitor/conveyancer will liaise with the seller’s legal team and your bank to arrange settlement. They will prepare the necessary transfer documents, check that any existing mortgages on the seller’s title are discharged, and calculate the final amounts to be paid (including adjustments for council rates, water, strata levies etc., up to the settlement date). If you’re a first home buyer using a grant or scheme, the solicitor will ensure those funds/concessions are applied now. Upgraders, if you’re simultaneously settling the sale of your old property, your conveyancer will coordinate that timing (often the two settlements can happen on the same day, one after the other, using the proceeds from your sale toward your purchase).

Pre-settlement inspection: In the week leading up to settlement, you’re entitled to a final inspection of the property (usually the day before or morning of settlement). This is to ensure the property is in the same condition as when you signed the contract and that any agreed inclusions (like appliances, fixtures) are still in place. Take this inspection seriously – check that no new damage has occurred and that the seller has cleared out all their belongings (unless something was meant to stay). If you discover a serious issue, inform your solicitor immediately; they can delay settlement or negotiate a remedy if needed. Minor issues can often be resolved by agreement or a small compensation.

Settlement day: On the settlement date, you usually don’t need to attend in person (most settlements now occur electronically via the PEXA platform or similar, or by agents meeting). Your conveyancer and the bank handle it all. The purchase price balance is paid to the seller, your home loan kicks in, and the title is transferred to your name. Once settlement is completed, you’ll be notified by your solicitor – congratulations, you now officially own the property! The agent will be authorized to hand over the keys to you at this point.

Moving in: Plan your move around the settlement time. If you were renting, coordinate the end of your lease and the move logistics. Book removalists well in advance. It’s wise to allow a few days buffer after settlement before you absolutely must be in the new home, just in case of any unforeseen delays. For upgraders who sold and bought, if the dates don’t align perfectly, you might have arranged interim accommodation or put belongings in storage for a short period – hopefully you minimized this gap. Once in your new home, change your address on utilities, electoral roll, and with any relevant institutions. Also, consider changing the locks for security (since previous owners, realtors, or tradespeople might have copies of the old keys).

💡 Tip: On move-in day, keep a box of essentials (kettle, phone chargers, basic tools, cleaning supplies, toilet paper, snacks) with you so you can settle in without scrambling to unpack everything at once. Take meter readings (electricity, water, gas) at move-in for your records. And don’t forget to celebrate this milestone – owning a home is a big achievement!

Conclusion: Ready to Buy in 2025

Whether you’re a first home buyer stepping onto the property ladder or an upgrader moving to your next dream home, the property buying process can be made smoother with the right preparation and mindset. In 2025, buyers have a lot working in their favor – government incentives for first-timers, and improving market conditions for those upgrading (with more stock on the market and the prospect of improved borrowing power)brokernews.com.aubrokernews.com.au. By following this step-by-step guide, you’ll be well-equipped to handle each phase: from initial planning and budgeting, through loan approval and house hunting, to making an offer and settling into your new home.

Key takeaways:

• Do your homework: Knowledge is power in real estate. Understand your finances and the market before you dive in.
  
  
• Leverage available help: Use grants, schemes, professional advisors, and reputable resources to your advantage. Don’t hesitate to get expert help, especially for legal and financial matters.
  
  
• Stay level-headed: Property buying can stir emotions. Stick to your budget and due diligence, and you’ll make a sound investment.
  
  
• Think long-term: Choose a property that not only suits your needs now but will serve your goals for years to come, whether it’s starting a family or growing your investment portfolio.
  
  

Buying a home is a significant journey, but with careful steps, it’s absolutely navigable. Here’s to finding and securing your perfect property in 2025. Happy house hunting, and good luck with your purchase! 

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Sources:

Home Guarantee Scheme

https://www.housingaustralia.gov.au/home-guarantee-scheme

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Why 2025 could be the year upgraders make their move | Australian Broker News

http://www.brokernews.com.au/news/breaking-news/why-2025-could-be-the-year-upgraders-make-their-move-286956.aspx

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MyPropertyPro

https://www.mypropertypro.com.au/articles/buy-before-you-sell-or-sell-before-you-buy-which-is-better

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My Property Pro

https://www.mypropertypro.com.au/

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Articles | My Property Pro

https://www.mypropertypro.com.au/articles?db326f55_page=3

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‘Couples’ to include siblings and friends under expansion of Australia’s first home guarantee | Housing | The Guardian https://www.theguardian.com/australia-news/2023/apr/30/couples-to-include-siblings-and-friends-under-expansion-ofaustralias-first-home-guarantee

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