Record loans, soaring house prices, another windfall for banks: new housing policy did exactly as expected

The Commonwealth Bank has delivered a staggering profit update amid a surge in first home buyers trying to crack the property market.

Australia’s largest bank posted a $5.4 billion half-year net profit on the back of increasing lending and deposit volume growth.

It coincided with new ABS figures that revealed a seven per cent spike in the number of first-time property buyers taking out home loans in the December quarter 2025.

A total of 31,780 loans were issued to first-home buyers in the quarter – the most in two years.

The Australia Institute’s Chief Economist Greg Jericho said it was the first insight into the impact of the Albanese Government’s 5 per cent deposit scheme introduced in October 2025.

“That’s a big jump … but there was nearly a 16 per cent increase in the amount of money being loaned,” he pointed out.

“Now their average loan is around $606,000. That is also a record high.”

“We know that how much first home buyers borrow leads directly into the price of houses,” said Mr Jericho.

They’ve already seen their loan value rise by 15.5 per cent.

Speaking on the Australia Institute’s Dollars & Sense podcast, Mr Jericho said the policy “did exactly what we thought it would.”

“It didn’t really do anything other than juice up demand and increase house prices.

“Unfortunately, we now have the proof.”

The figures show investors rushed to snap up properties before the government scheme began.

“There was a big spike in investor housing loans taken out in the September quarter, so the quarter before this deposit guarantee came in,” Mr Jericho said.

“It was clear they were trying to get in beforehand.

“But investors like house prices going up. They know that if there’s a lot of demand that means buy now, house prices are going up and they can sell it for a profit.

“So even in the December quarter, they were still growing fairly strongly.”

According to the Commonwealth Bank, investor lending accounted for 43% of new business in the first half of the financial year – up from 37% two years ago.

Mr Jericho said over the past year, the total amount of investor home loans across the country is up 32 per cent.

“Given that we’ve just hit record size average home loans, it wouldn’t be a shock if we start getting record average prices for houses.

The Albanese Government is facing mounting pressure to address the escalating housing crisis.

There’s speculation Treasurer Jim Chalmers will announce a reduction of the 50 per cent concession for capital gains tax when he hands down the federal budget in May.

“We’ve been pushing this for ages and slowly but surely, other people are coming on board,” said the Australia Institute’s chief economist.

Figures released as part of a Greens-led Senate committee into the CGT discount show one per cent of income earners are getting 59 per cent of the benefit of the tax discount.

“It just highlights that the capital gains tax discount is pretty much the most inequitable government policy going around,” Mr Jericho said.

“There aren’t too many policies that give basically 60 per cent of the benefit to the richest one per cent.

“Could you imagine going to an election saying, ‘Hey, we’ve got this great tax policy … and it’s going to have the added benefit of distorting the housing market, meaning that no one can afford a home.”

The Parliamentary Budget Office estimates the CGT concession will cost the budget $247 billion in foregone revenue over the next decade.

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