How the government’s 5pc deposit scheme could ignite a property surge

• The government’s new home deposit scheme lets eligible buyers purchase with a 5% downpayment and no LMI
• Income and place caps have been removed, making the scheme accessible to millions more Australians
• Market experts say it will lift demand but warn limited housing supply could drive prices even higher

Special Report: The Australian government’s newly expanded federal 5% home deposit scheme has set off a wave of optimism across the property sector.

By slashing the deposit hurdle for first-home buyers and single parents – and scrapping income caps and annual quotas – the program could reshape the demand landscape in the coming year.

The move comes at a time when affordability and access to finance remain major barriers to home ownership.

For many Australians, saving a 20% deposit can take nearly a decade. Now, with the Commonwealth guaranteeing loans for deposits as low as 5% (and just 2% for single parents), buyers can enter the market much sooner and without paying costly Lenders’ Mortgage Insurance.

Unlimited access, but limited supply

Since the start of this month, the scheme has removed all income thresholds and waiting lists, opening the door for a broad cross-section of Australians to participate. It also raises price caps to reflect current market values – in Sydney, for instance, up to $1.5 million.

But according to Chris Christofi, founder and CEO of Reventon, one of Australia’s leading property advisory and wealth firms, the real test will be whether supply can keep pace with the new wave of demand.

“This move is likely to drive confidence in the market,” Christofi says. “It gives Australians who’ve been sitting on the sidelines a way in. But if new housing supply doesn’t keep up, we’ll simply see upward pressure on prices, especially in the markets that are already tight.”

Christofi says the government’s decision to drop income limits will likely shift sentiment faster than expected.

“Previously, the cap system locked out many middle-income families. Now, the floodgates are open,” he said. “Expect a sharp rise in pre-approvals through the December to March quarter as buyers try to get in ahead of another price climb.”

Where demand could surge

Christofi and his Reventon analysts point to three key zones likely to benefit the most:

• Outer-metro growth corridors such as Melbourne’s north and west, and Brisbane’s south-east
  • Regional hubs within the raised cap limits – think Geelong, Newcastle, and Toowoomba
  • New-build estates, where developers are already pivoting marketing campaigns toward first-home buyers using the scheme

“We’re already seeing developers design house-and-land packages priced just under the new thresholds,” Christofi says. “For first-home buyers, the opportunity is huge, but competition will be fierce.”

The affordability paradox

While the scheme reduces barriers to entry, critics warn it could also inflate prices. Christofi agrees that while the policy will help thousands of Australians buy sooner, it may also widen the affordability gap in the medium term.

“When government policy turbocharges demand without addressing construction bottlenecks, prices rise,” he said.

“We saw it with previous grants and incentives. The key is to pair demand stimulus with serious investment in supply.”

Christofi also believes that the best-positioned buyers will be those who act decisively but strategically.

“Get professional advice, understand your long-term cash flow, and choose growth locations. At Reventon, we’re advising clients to focus on value pockets where infrastructure, jobs, and affordability align,” he said.

The bottom line

For first-home buyers, the 5% deposit scheme is a potential game-changer, but for policymakers, it is also a balancing act between equity and inflation.

Reventon’s analysis suggests the next 12 months could bring a 5-7% lift in demand across key east-coast markets, particularly among dual-income households with solid credit profiles but limited deposits.

Christofi sums it up simply: “It’s the most generous scheme we’ve seen in years. The challenge now is to make sure it builds homeowners, not just higher prices.”

This article was developed in collaboration with Reventon, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.