{"id":603607,"date":"2026-04-13T07:12:12","date_gmt":"2026-04-13T07:12:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/603607\/"},"modified":"2026-04-13T07:12:12","modified_gmt":"2026-04-13T07:12:12","slug":"new-data-shows-how-the-5-deposit-scheme-inflated-home-prices","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/603607\/","title":{"rendered":"New data shows how the 5% deposit scheme inflated home prices"},"content":{"rendered":"

According to the most recent Australian Bureau of Statistics (ABS) housing finance data, $19.310 billion in mortgages were issued to first-time home buyers during the December quarter of 2025. This was a 16% gain over the previous quarter and the highest value since the first quarter of 2021:<\/p>\n

\"Value<\/p>\n

The average size of first home buyer mortgages also increased by a record 8.3% in the December quarter of 2025, to a new high of $607,500:<\/p>\n

\"Value<\/p>\n

Chart by Greg Jericho at The Guardian<\/p>\n

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It was revealed<\/a> that 22,921 guarantees were provided under the federal government\u2019s 5% mortgage deposit scheme for first home buyers in the four months following its expansion on October 1, 2025.<\/p>\n

This represented a 75% increase over the previous four-month period, June to September, when 13,105 guarantees were granted.<\/p>\n

The Reserve Bank of Australia\u2019s (RBA) latest Financial Stability Review also reported a sharp increase in high-loan-to-value-ratio (LVR) mortgage lending to first home buyers following the introduction of the expanded 5% deposit scheme.<\/p>\n

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\"FHB<\/p>\n

Diana Mousina, AMP\u2019s deputy chief economist, told the ABC that the data for the four months to January showed a \u201cmassive jump\u201d.<\/p>\n

\u201cWe know that incentives really matter in the housing market\u201d, she said.\u00a0\u201cWhenever we get some sort of grants or discounts, we always see a big take-up of these things\u201d.<\/p>\n

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The expanded 5% home deposit scheme was marketed by the federal government as an affordability measure. However, economists warned that these types of demand-side measures are always self-defeating from an affordability perspective, since they inevitably push home prices higher, thereby making housing less affordable.<\/p>\n

Cotality\u2019s latest housing chart pack illustrates this point. As shown below, price growth for properties valued at the bottom 25% quartile, which fall well within the 5% deposit scheme\u2019s price caps, grew the strongest in the three months to March 2026 across every major capital city market:<\/p>\n

\"Cotality<\/p>\n

Source: Cotality<\/p>\n

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By contrast, the most expensive 25% of homes, which fall outside of the price caps, experienced the weakest price growth across every capital city market except the ACT.<\/p>\n

Thus, the 5% deposit scheme simply drove up the price of entry-level homes, ultimately making them more expensive for first home buyers.<\/p>\n

Future first home buyers will face the prospect of paying more for housing and holding larger mortgages than they otherwise would have without the 5% deposit scheme.<\/p>\n

Advertisement<\/p>\n","protected":false},"excerpt":{"rendered":"According to the most recent Australian Bureau of Statistics (ABS) housing finance data, $19.310 billion in mortgages were…\n","protected":false},"author":2,"featured_media":515439,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":{"0":"post-603607","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/603607","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=603607"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/603607\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/515439"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=603607"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=603607"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=603607"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}