Previously known as “The Property Planner, Buyer and Professor”
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Show Notes – The 5% Deposit Scheme
In this week’s episode, The Property Trio unpack one of the most impactful housing policy changes we’ve seen in years: the expansion of the Home Guarantee Scheme.
The Big Shake-Up
As of 1 October, under the expanded scheme, eligible first home buyers can now enter the market with just a 5% deposit and without paying Lenders Mortgage Insurance.
And the ripple effects are already being felt across the country.
Income caps are gone, price caps are up and the government is backing loans to get first-timers into their homes sooner.
The Trio explain how removing income limits and lifting price ceilings (in some cities by hundreds of thousands) effectively signals both first home buyers and investors to jump in before prices move.
They also explore how even extremely high-income earners now qualify, a huge shift from the previous capped system.
What This Means for the Market
This policy isn’t subtle.
Median-value homes in major cities are suddenly on the table with just a 5% deposit and the Trio discuss how this is set to turbocharge demand in tightly-contested price brackets.
Lived Reality & Market Signals
The Trio share what’s happening on the ground: first home buyer confidence is up and mortgage brokers are reporting a surge in FHB pre-approvals.
Even though there are 33 participating lenders, each has its own rules on how much savings buyers must contribute.
That’s why getting guidance from a strategic mortgage broker is invaluable.
The Numbers That Matter
Using an $800k purchase example, the Trio illustrate just how game-changing this is.
Requiring only $40k instead of $160k saves years of waiting, plus buyers avoid tens of thousands in Lenders Mortgage Insurance (LMI).
But beware…stamp duty can still bite hard, especially in VIC and NSW, and in some cases can even exceed the deposit.
That means a 5% deposit isn’t the whole story, buyers still need buffers and strategy.
Will This Push Prices Up?
Short answer: yes.
Treasury forecasts a modest 0.5% uplift, but independent modelling suggests growth from 3.5–6.5% in key price brackets is more likely, especially where demand is already hot.
Over time, supply could catch up, but in the short term, the Trio expect competition to rise.
Strategy Still Matters
The scheme creates opportunity, but strategy, buffers and smart lending advice remain essential.
This initiative is great for the right buyers, not a cure-all for affordability and definitely a market-mover.
Gold Nuggets
Cate Bakos’s gold nugget: Cate reflects on the policy, and what she’d do differently. “I do like the policy, but I don’t like price caps. They segment markets”. Cate proposes an uncapped offering.
Dave Johnston’s gold nugget: Dave feels the policy makers could have spent more time on the scheme to have it more appropriately targeted. He uses singles without parental support as a key example of one of the categories of buyers who really need the help.
Resources:
- Ep. 13 How age and stage of life can impact your property plan and selection
- Ep. 21 Why price point should determine location and strategy
- Ep. 22 Why the family home is often the biggest piece of the investment puzzle
- Ep. 152 Top 10 tips for first time buyers and investors – How to get it right first time
- Ep. 181 First Home vs Forever Home; Dream Home vs Investment – What are the trade-offs and key considerations?
