Equity is one of those financial buzzwords that gets thrown around a lot – but in 2025, it’s more relevant than ever for Australians aiming to build wealth and create financial security. Whether you’re a homeowner, investor, or entrepreneur, understanding equity and how to use it strategically can make a significant difference to your bottom line.
What Is Equity? More Than Just a Number
At its core, equity is the value of ownership. In finance, it’s the difference between what you own and what you owe. For most Australians, equity is most familiar in the context of property – the portion of your home that you truly “own” outright, calculated as the property’s market value minus any outstanding mortgage.
- Property Equity: If your home is worth $900,000 and your mortgage balance is $400,000, your equity is $500,000.
- Share Equity: In shares, equity is your ownership stake in a company, reflected in the value of your shares minus any margin loans.
- Business Equity: For business owners, equity is the value of the business after subtracting debts and liabilities.
In 2025, with property prices continuing to fluctuate and share markets remaining volatile, keeping an eye on your equity position has become more critical than ever.
How Australians Are Using Equity in 2025
Rising interest rates and tightening lending standards have changed how banks and lenders view equity. Despite these shifts, savvy Australians are still leveraging their equity to fund renovations, invest in property, or diversify into shares.
1. Tapping into Home Equity
The Australian Prudential Regulation Authority (APRA) introduced new serviceability buffers in late 2024, making it slightly tougher to borrow against home equity. However, banks are still offering competitive home equity loans and lines of credit to borrowers with strong financials and sufficient equity (typically 20% or more).
Common uses for home equity in 2025 include:
- Funding major renovations or extensions
- Purchasing an investment property (using equity as a deposit)
- Consolidating higher-interest debts
- Starting or expanding a small business
For example, a Melbourne couple in 2025 used their $400,000 home equity to purchase a $700,000 investment property, taking advantage of stable rental demand and new tax incentives for energy-efficient homes.
2. Equity in the Share Market
Equity isn’t just about property. Australians are increasingly building wealth through shares, ETFs, and managed funds. In 2025, the ASX has introduced stricter margin lending rules to curb speculative risk, but investors with a solid equity base can still leverage their portfolios to access funds for further investment.
Shareholders in companies like CSL or Commonwealth Bank have seen the value of their equity rise and fall with market swings, highlighting the importance of diversification and not overextending with margin loans.
3. Business Equity and Startups
For entrepreneurs, equity represents ownership in a business. In 2025, the Australian government has launched updated Small Business Equity Grants, designed to help startups attract investors and scale operations. Founders can offer equity stakes to investors in exchange for capital, but it’s crucial to understand the dilution of ownership and long-term control implications.
As more Aussies embrace side hustles and startups, understanding business equity and how to structure deals has become a key financial skill.
Risks, Rewards, and New Policy Updates in 2025
Equity can be a powerful tool, but it isn’t risk-free. Recent policy shifts have changed the landscape:
- APRA’s tighter lending rules: Serviceability assessments are stricter, particularly for investors, which may limit how much equity you can unlock.
- Stamp duty reforms: Some states are trialling annual property taxes as an alternative to upfront stamp duty, impacting the cost-benefit of leveraging equity for new property purchases.
- Capital gains tax (CGT) adjustments: The 2025 Federal Budget increased CGT discounts for certain green investments, making it more attractive to use equity for sustainable upgrades or assets.
While unlocking equity can accelerate your wealth-building, it’s essential to factor in potential risks, including higher repayments if interest rates rise, and the possibility of negative equity if asset values fall.
Building and Protecting Your Equity Position
Here are practical tips for Australians looking to build and protect their equity in 2025:
- Make extra mortgage repayments to boost home equity faster.
- Regularly review property and share values to monitor your equity position.
- Keep debt levels manageable – avoid over-leveraging your home or investments.
- Consider professional valuation before leveraging home equity for big investments.
- Stay informed about tax, lending, and superannuation policy changes that impact equity strategies.
Conclusion: Equity Is Still King in 2025
Whether you’re eyeing your first investment property, expanding a share portfolio, or building a business, equity remains a core driver of wealth for Australians. With new lending rules and policy updates in 2025, the smartest moves involve balancing opportunity with risk, and keeping a keen eye on how your equity position is tracking.
