The government’s expanded five per cent first home deposit scheme will officially take effect on Wednesday 1st of October , delivering on a key election promise.
Under the Labor initiative, all first home buyers will be able to enter the property market with just a five per cent deposit, with the government backing the remainder. There will be no caps on income or the number of applicants, while property price caps will be adjusted upward to match average housing prices, giving buyers access to a broader range of homes.
The government estimates that buyers in the first year alone could avoid around $1.5 billion in mortgage insurance costs.
However, the Real Estate Buyers Agents Association of Australia (REBAA) has raised concerns about unintended consequences. REBAA president Melinda Jennison said housing prices had already spiked in anticipation of the scheme, with properties that sold for $750,000 last month now fetching close to $800,000.
She warned that panic buying was taking hold, with some buyers paying inflated prices or purchasing homes sight unseen. While acknowledging the scheme’s intent to support first-time buyers, Jennison cautioned that without an increase in housing supply, the surge in demand could drive prices even higher.
“What was $800,000 will soon be $900,000,” she said. “That will only make it harder for first-timers to secure finance, even with the scheme’s reduced deposit requirement.”
Jennison urged buyers to remain calm, stick to their budgets, and seek professional advice to avoid being swept up in the frenzy.
