Banks are altering how the debts are treated in mortgage applications following advice from regulators requested by Treasurer Jim Chalmers in February.
The nation's largest lender will from Wednesday disregard a HECS-HELP debt when assessing a borrower's ability to make repayments, if the debt is due to be paid off within 12 months.
"This will allow eligible customers to achieve their home ownership goals sooner," Commonwealth Bank home buying manager Michael Baumann said in a statement.
That could add $36,000 to the borrowing power of a couple earning $140,000, mortgage broker George Samios estimated.
A couple earning $240,000 could add on another $187,000, he said.
The change comes as new data on Wednesday shows home values have climbed across the nation by almost 40 per cent in the past five years.
While trailing the roughly 80 per cent surges at the turn of the millennium and in the late 1980s, it far outstrips those past booms in real dollar terms, real estate analysis firm CoreLogic said.
Values have increased by roughly $230,000 in the past five years.
Residential real estate nationwide is estimated to be worth $11.3 trillion with increases attributed to existing homes appreciating in value and the addition of new builds.
A HECS debt can reduce a first homebuyers' borrowing capacity quite substantially, adding to hurdles created by high-interest rates and loan serviceability buffers, CoreLogic economist Kaytlin Ezzy said.
"It is definitely a sticking point for a lot of people trying to get into the market," she told AAP.
Finance Brokers Association of Australia managing director Peter White welcomed the changes, saying those close to paying off their debt will find it easier to secure a loan and be able to borrow more.
"While we understand that HECS is a debt and should be included in any loan assessment, the time left to repay the debt should be taken into consideration," he said.
Both major political parties are pushing policies to increase housing supply in the federal election, as well as promising to make it easier for first homebuyers to enter the market.
But Labor's goal to build 1.2 million new homes by 2029 appears unlikely to come off, with approvals and commencements lagging the rate required.
The coalition has meanwhile promised a $5 billion fund for enabling infrastructure.
That could go some way to increasing development but the overall impact was difficult to forecast, Ms Ezzy said.
Labor's expanded shared-equity scheme or the coalition's promise to allow first homebuyers to use superannuation for deposits will also increase demand.
"A lot of those policies obviously, while well-targeted, are going to have some inflationary impact on housing values," Ms Ezzy said.Â
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