Australia’s expanded 5% deposit scheme is reshaping the housing market – and intensifying competition at the bottom end – with affordability now heavily dependent on where buyers live, new Ray White analysis shows.
The scheme’s higher price caps and removal of income limits have opened the door to far more first-home buyers, but only in markets where enough homes sit below the threshold.
Melbourne has emerged as the capital with the greatest number of properties under its $950,000 cap. Over the past year, more than 33,000 houses and 26,700 units sold below the limit.
That means around 60% of Melbourne’s house sales and 86% of unit sales are eligible under the scheme, giving first-home buyers comparatively broad choice.
Sydney, with a higher cap of $1.5 million, sits close behind, supported by a large apartment sector where 85% of sales fall under the threshold.
At the other end of the spectrum, the Gold Coast is now “the most challenging market in Australia for buyers using the scheme”.
Only 1,734 houses sold under the $1 million cap in the past year, representing just 26.9% of all detached house sales.
Units are more attainable, with 70% under the threshold, but Ray White's Nerida Conisbee (pictured) notes that “the small number of eligible apartments still trails every other city surveyed.”
On the Gold Coast, “construction costs, planning delays and a heavy shift toward premium product have pushed vast numbers of homes above $1 million, shrinking the pool of options for those the scheme is designed to support.”
Conisbee argues the contrast exposes “a fundamental flaw in the current approach: government policy has overwhelmingly stimulated demand, without providing matching support for supply.”
“The scheme itself is now one of the strongest drivers of demand in the affordable segment. More first-home buyers can compete, earlier, and with smaller deposits,” she said. “The problem is not that too many people want to buy property. The problem is that we have failed to build enough of it.”
Melbourne and Sydney have “benefited from more balanced policy settings”, including medium‑density development, new masterplanned communities and stronger supply pipelines that help keep more stock under the caps.
Overall, the 5% deposit scheme “has removed a major barrier to homeownership.” But Conisbee warns that without a significant acceleration in supply – “especially well-located townhouses, smaller family homes, and quality mid-rise apartments” – first-home buyers will remain stuck in an affordability trap.
More demand without more homes, she says, “doesn’t improve affordability. It makes the challenge more acute.”
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