The Unseen Impact of 5% Expanded Deposit Scheme on Home Prices

When the government expanded the 5% deposit scheme in October (removing the old place caps and lifting price thresholds to $950k for units and $1.5M for houses in the capitals), the initial reaction was one of relief. Finally, a real leg-up for first home buyers.

But a month on, the data is starting to tell the rest of the story, and it’s worth understanding before you jump in.

What The Data Tells Us

Earlier in October 2025, the 5% deposit scheme got a big lift-off. Gone were the tight caps on eligible spots and incomes. But now, price thresholds have climbed to $950k for apartments and $1.5M for houses in major cities. And that too, with regions like Darwin holding steady at $600k.

It further results in relief from LMI, the biggest upfront cost and the hurdle of every first home buyer stepping into the market. But soon after, the home values start rising. Like, dwellings climbed 1.2%, outstripping the 1.0% rise for pricier ones above caps.

To be more precise, houses under caps surged 1.3% (32 basis points ahead), while units hit 1.0% (19 basis points up). It’s like the market’s whispering, "If it’s easier to buy here, watch us flock."

Why This Is Happening Is Fairly Straightforward

More buyers can now enter the market with only 5% saved. And most of them are naturally looking at the same, more affordable properties. But listings are still low, competition increases, and settled prices move a little higher.

Like, on a $650,000 home, an extra 1.2% is another $7,800. Although it’s a small rise, but still adds real pressure when you’re already stretching your budget beyond your capacity.

What Does It Mean For You?

Nothing here changes the fact that borrowing power is the highest it’s been in years, and genuine opportunities still exist, especially if you’re close to ready.

It simply means the entry-level price points are seeing a little extra heat right now. So, if you’re already close to 5% saved, this is still a very good time to move. That’s because the extra competition is gentle, not wild, and pre-approvals are moving faster than they have in the past two years.

But if you’re 6–18 months away, it’s just a quiet reminder to keep the savings momentum strong and perhaps look one or two suburbs further out than you first planned. Because the same scheme’s price caps apply there too, and the upward pressure is lighter.

Either way, the rules have tilted in favour of first-home buyers more than at any point since 2022. The only new variable is that the most popular price brackets are now a touch busier.

Want more information on where you are right now and how to improve your current position? Call us at 1300 GET LOAN or 0456 456 267 or visit Nfinity Financials.

Nfinity Financials

At Nfinity Financials, we appreciate the fact that the buying of an investment property is a leap towards wealth creation.