A new report from property analysis company Cotality shows the prices of entry-level houses rose 6.7% in the first six months after the Government rolled out its discounted deposit scheme.
From October 2025, the Government has subsidised first home purchases, meaning people only need to save for a 5% deposit.
A spokesperson for Housing Minister Clare O’Neil said: “Entry-level prices have been rising faster than the rest of the market for several years.”
Govt Scheme
In 2020, the Federal Government introduced a scheme allowing first-home buyers to purchase a property with a 5% deposit, instead of the usual 20% required by banks.
Initially, eligibility for the program was limited by income, and the number of places available each year was capped.
In October 2025, the Government removed those limits.
Property price caps still apply depending on location, up to $1.5 million.
New data
Cotality’s report identified a 6.7% spike in the price of “entry-level homes”.
It attributed this to a few key factors:
Some demand was “brought forward” as buyers who might not have needed the scheme moved quickly to purchase cheaper properties, anticipating more competition once the scheme was introduced.
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Higher home prices overall and interest rates have reduced people’s borrowing power, pushing more buyers toward lower-priced homes.
3. Record competition from investors in the cheaper end of the market, adding further pressure on first-home buyers.
This graph shows home price changes for properties eligible under the scheme.
Government Response
A Government spokesperson said it makes “no apologies,” arguing that without the scheme, “many first home buyers wouldn’t be able to enter the market at all.”
In February, the ABC reported more than 22,000 homes had been purchased since the 5% scheme was expanded in October.
The spokesperson said the Government was working to “fix a supply problem generations in the making”.
Opposition Response
The Opposition said this week’s report is evidence the Government’s “initial dodgy modelling” ignored warnings from economic experts that the policy would push up property prices.
In a statement to TDA, Shadow Housing Minister Andrew Bragg said the scheme was a “gimmick” that was “making things worse for house prices and for young Australians.”
“Labor is forcing these younger Australians to take on larger and riskier home loans,” Bragg added.
