Australia’s expanded 5% Deposit Scheme is driving a sharp lift in first-home buyer activity, with one in ten homes sold in October supported by a government guarantee.
Government data shows 5,778 guarantees were issued during the month, up 48% on a year earlier, signalling a stronger push from entry-level buyers as affordability pressures mount, realestate.com.au reported.
Rising budgets also reflect the shift. Resolve Finance reports the average first-home buyer now expects to spend $637,000 in 2025, up from $599,000 last year, with 57% of renters planning to buy within two years. Buyers are adapting to stronger price growth and tightening savings timelines, contributing to increased early-stage activity.
At the same time, saving a deposit has become significantly tougher. New analysis shows 20% deposits in major cities now routinely exceed $150,000, pushing many first-home buyers toward low-deposit pathways to enter the market sooner, especially amid expectations of further price and rent increases through 2026.
Raine & Horne reports the scheme is already showing real-time impact across its national network, with open-home attendance rising 10% in October following the expansion.
“The increase in first-home buyer activity is having a ripple effect that is expanding beyond entry-level properties, and helping drive prices higher across the broader market as established homeowners look to upgrade to their second or third properties,” said executive chairman Angus Raine (pictured left).
PropTrack data shows national home values rose 7.5% over the past year, adding about $65,200 to the median value, now $858,000.
“Market momentum is building amid renewed buyer confidence and improved sentiment, buoyed by earlier rate cuts,” said PropTrack senior economist Eleanor Creagh (pictured center).
Mortgage Choice broker Terence Hammond said the expanded scheme has injected heat back into the market.
“We’ve definitely seen an increase in demand from first-home buyers since the scheme launched on 1 October. It has made a massive difference,” Hammond told realestate.com.au. “There’s lots of people turning up to open homes, which is pushing up prices.”
Mortgage Choice’s Home Loan Report shows the average loan size climbed 8.4% year-on-year to more than $660,000, with every region recording increases.
“Annual growth was highest in Western Australia, where the average loan size rose nearly 12% year-on-year,” CEO Anthony Waldron (pictured right) said.
South Australia and the Northern Territory also saw notable gains, with average loan sizes in those regions topping $600,000 for the first time.
Government and critics clash over price impacts
Housing Minister Clare O’Neil argues the scheme is cutting years off deposit timelines for young buyers.
“We made a promise to first-home buyers that we would help them and that’s exactly what we’re doing,” O’Neil said.
But Liberal Senator Andrew Bragg warns the policy risks inflating housing costs.
“If you fail to increase supply and increase demand, higher prices will emerge,” Bragg said.
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