Wednesday, October 1, 2025, was a significant day. Aside from being the start of the last quarter of the calendar year, October 1 represented the commencement of the new and improved Australian Government’s 5% Deposit Scheme.
What this means is that first home buyers of all income levels, in unlimited numbers, can now purchase a property with just a 5% deposit and without the need to pay costly mortgage insurance.
The government acts as guarantor for 15% of the loan – the difference between 80% loan-to-value ratio (where no mortgage insurance applies) and 95% loan-to-value ratio (where mortgage insurance does apply).
It’s a timely move, given it will soon be impossible to buy a property in Australia for less than $1 million in the country’s top five cities – Brisbane, Melbourne, Sydney, Adelaide and Perth.
The biggest difference in the Government scheme, however, is not the removal of income caps or limits on the number of applicants, but the significant increase in price caps:
Almost all these price caps have been lifted by 30% to 50% – bringing them in line or below the median house price and well below the median unit price in each city.
With this, there comes a warning: you will not see a house under $1 million in the Big Five by the end of next year (2026).
We have never seen a stimulus package for first home buyers like what we are seeing today. I’ve told my sister to hurry up and buy something as she is eligible for this opportunity.
You should be telling your kids, siblings, friends and family to do the same.
If you’re an investor, hold onto what you’ve got and add to your portfolio where you can.
The affordable end of the market, which my uncle and I have long advocated as being the best section of the market to invest. It is about to get some gasoline thrown onto the fire.
Don’t say I didn’t warn you.
