The promise of easier entry
When the federal government announced its expanded 5% Deposit Scheme in 2025, the headlines looked reassuring. First-home buyers would have access to the property market with just a 5% deposit. No Lenders Mortgage Insurance. Unlimited places. Everyone eligible.
Finally, some thought, the government was stepping in to address housing affordability.
I watched the announcement with a mixture of hope and dread. Hope, because genuinely helping first homebuyers matters. Dread, because I’ve worked in this market long enough to understand that poorly thought-out and delivered government intervention can have lousy ramifications for our free market.
Here’s the thing: I want first-home buyers to get into our market, but stimulus schemes that lack serious economic foresight don’t help… they actually often harm the people they’re meant to assist.
Timing is everything
The scheme was announced months before the October 1 launch date, and that announcement window proved fatally flawed.
Investors understood immediately what was coming. They knew that once first-home buyers could access 5% deposits, demand at the sub-$1 million mark in Brisbane would spike dramatically.
So, investors didn’t wait. They started accumulating stock before the scheme took effect, securing properties at prices that would look cheap once FHBs could access the new rules. They positioned themselves to capture the gains they knew were coming.
By October 1, when first-home buyers finally could use the scheme, the market had already repriced. Properties that would have been available at pre-announcement prices were gone. The suburbs targeting the sub-$1 million mark had experienced noticeable price acceleration. And the first-home buyers entering the market found themselves in a more expensive, more competitive environment than they would have faced without the stimulus.
All the benefit the scheme was supposed to deliver was swallowed up by the value gains it generated during this implementation window.
It’s like the government handed investors a treasure map saying, “First-home buyers will be here in three months, get there first.” And they did.
Why should this have been predicted?
What makes this frustrating isn’t that it happened. It’s that we’ve seen this happen time and again, where government intervention influences activity to the detriment of our most vulnerable.
For example, in Queensland, the Home Ownership Made Easy (HOME) scheme in the mid-1990s was implemented to help low-income earners enter the market through shared equity. Many took advantage, and there was a dramatic uptick in demand for housing at the affordable end.
Unfortunately, once the frenzy eased, some of these properties saw their artificially inflated values decrease. People who had utilised the HOME program began to fall into negative equity. Their ability to buy out the government’s share of their house became a struggle, and cheap homes went back on the market. There is a very good chance this policy failure actually extended the depressed Queensland market in the second half of the 1990’s.
Unfortunately, learning from recent precedent isn’t high on the federal government’s agenda either.
At all tiers, we’ve seen politicians implement schemes that ultimately prove poorly thought out beyond their vote-winning potential. The short, medium, and long-term implications are brushed aside.
Predictable and Problematic Response
I see what’s happening in Brisbane’s property market every day – and it’s not pretty for first homebuyers right now. The $1 million price cap for the scheme here means the program’s target properties have garnered elevated, out-of-cycle buyer attention.
Market activity at that price point since the announcement has been intense. First-home buyers desperate to use the scheme are competing hard. But they’re competing in a market that’s already repriced up 20 per cent or more.
First homebuyers are stretched and stressed, making decisions they’re not entirely comfortable with because they felt they had to move before prices shifted further. They’re using the scheme, sure, but they’re paying more for the privilege than they would have if the stimulus had been implemented quietly and suddenly, rather than announced months in advance.
The Ripple Effect
Here’s what policymakers don’t seem to grasp: stimulus at the lower end ripples outward and upward.
First-home buyers using the 5% scheme to enter at the sub-$1 million mark create upward pressure on the $1 to $1.5 million segment. That’s where growing families move when they need more space. When that segment gets crowded and more expensive, the $1.5 to $2.5 million family market… and so on.
The whole market shifts. A demand injection at the lower end pushes prices up across the board.
And the families who wanted to actually use the scheme? Many of them are still getting less for their money than they would have without the stimulus, because the market has already adjusted to their increased buying power.
Demand Without Supply is brutal
Here’s the thing that really frustrates me: the government is trying to solve an affordability problem with a demand-side tool. That’s backwards.
Housing affordability right now isn’t fundamentally about buyers not having enough purchasing power. It’s about supply not keeping pace with demand. When you inject stimulus that increases demand without addressing supply constraints, you don’t improve affordability. You inflate prices.
That’s Economics 101. More demand, limited supply, higher prices.
The 5% scheme does nothing to address planning constraints, construction costs, or the regulatory barriers that make housing expensive to build. It just says to buyers: “You can with less savings.”
In Brisbane, our team is working with first-home buyers who’ve used the scheme. They’re stressed about their thin equity buffer. One interest rate rise and they’re in trouble. I’m seeing investors who made smart plays before October 1 repositioning their portfolios.
This isn’t the outcome the government intended. But it’s the outcome their scheme created.
The solution
I’m not anti-government. I want more help for first homebuyers. What I am is pro-evidence-based policymaking that addresses root causes.
If the federal government genuinely wanted to improve housing affordability in Brisbane and across Australia, they’d focus on supply. They’d work with state governments to streamline planning approvals. They’d address regulations that make construction expensive. They’d tackle the genuine barriers to housing supply.
Instead, they’ve launched a scheme that inflates demand without addressing supply, announced it months in advance so investors could position themselves, and told first-home buyers they’ve been “helped” when what’s really happened is the market has repriced around their increased purchasing power.
We’re committed to helping our clients, such as first-home buyers, growing families, and experienced investors, make sound decisions in the market as it is, not as government policy intended it to be.
But I’ll remain frustrated by stimulus schemes that lack economic foresight. First homebuyers deserve better than policy theatre. They deserve genuine support for housing affordability, not demand-side gimmicks that inflate prices in the name of helping them.
That’s not affordability. That’s market timing dressed up as policy, and first-home buyers deserve better than that.
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