The federal government has expanded its 5 per cent deposit scheme, allowing all first-home buyers to enter the market with a much smaller deposit compared to the traditional 20 per cent requirement.

Prime Minister Anthony Albanese said the initiative would help more young Australians secure their first homes sooner, while Housing Minister Clare O’Neil stressed that the government could not stand by without offering support to an entire generation locked out of the property market.

Under the scheme, price caps have been set for different cities, including $1.5 million in Sydney, $1 million in Brisbane and Canberra, $950,000 in Melbourne, and lower thresholds in other capitals such as Adelaide, Perth, Hobart, and Darwin.

While the scheme makes home ownership more accessible, concerns remain about its impact on property prices. Treasury has projected a modest 0.5 per cent rise in house prices over six years, though analysts warn the actual increase could be higher. Home values have already been rising at their fastest pace in nearly two years.

Critics point out that the policy does not address the core issue of housing supply. The government is currently projected to fall short by at least 50,000 homes this year in its target of building 1.2 million new properties by 2029.

Treasurer Jim Chalmers admitted the government must “do better” to meet its housing goals, but defended the deposit scheme as an important step in easing affordability barriers for first-home buyers.