Is the 5% Deposit Scheme pushing first home buyers’ dreams out of reach? | ABC NEWS

A six-month review by Cotality of house prices after the introduction of the expanded Australian Government 5% Deposit Scheme shows it’s fuelling competitive tensions at the lower end of the property market, so much so that it’s likely to gradually lose its stimulatory power.

Cotality research head Tim Lawless says homes eligible for the scheme rose 6.7% nationally, compared to a 3.6% rise in values for properties above the price cap.

He says while the scheme has helped first home buyers get into the market, “it’s done nothing to address the underlying challenges of affordability, like low supply levels”.

“What it’s doing is a bit of a sugar hit for values … it’s placing further upwards pressure on prices.”

In cities, such as Sydney, where values have fallen for houses above the price cap, those below the price cap — and therefore eligible for the 5% Deposit Scheme — have gone up. In Perth, Cotality’s data shows values that fall within the scheme have risen 18.2% over the past six months.

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