A Melbourne couple has moved into a new home that cost $80,000 less than they planned to spend. Jeyakaran Karnan and Shree Harini Vinothkumar chose a $720,000 house-and-land package in Clyde North after finding auctions stressful. They built at the Orana estate, where they hoped their son Yaalan could grow up among other young families. The couple used the federal 5 per cent deposit scheme, which reduced their deposit to $36,000. Construction took about four months, with the keys arriving roughly 10 months after they signed up.
First-home buyers who used the government's 5 per cent deposit scheme in Sydney and Melbourne unit markets face the greatest risk of negative equity, according to a FoundIt report. Average home prices in both cities are more than 6 per cent below last year's levels. Buyers who entered the market shortly after the scheme's October expansion could owe tens of thousands of dollars after selling. Shadow Housing Minister Andrew Bragg called the expansion unfair, while a spokesperson for Minister Clare O'Neil said the scheme had saved buyers money.
First-home buyers have been locked out of 169 previously affordable Queensland property markets since the federal 5 per cent deposit scheme was expanded a year ago. An analysis of Realestate.com.au data found that 852 of 890 house and unit markets have risen in value. Deagon houses jumped 31.2 per cent to $1.187 million. Since October, new Queensland mortgage lodgements have fallen 30 per cent, with first-home buyer applications down 18 per cent, according to Loan Market. Buyer's agent Lauren Jones said rising interest rates and living costs have cut borrowing power, leaving young buyers largely absent from the market.
AU Now app
Your suburb’s news, alerts and Shorts — in one app
Alerts, Shorts and your saved stories — free on Google Play.
Typical home prices in 18 Melbourne suburbs have moved above the $950,000 cap for the federal first-home buyer scheme, according to new REA Group figures. The cap was lifted by $150,000 last October, but rising prices have pushed these suburbs beyond it again. Templestowe's median unit price now sits $31,500 above the limit. Industry figures say the scheme makes larger mortgages easier to access but does not necessarily make housing more affordable, while one builder reports packages starting at about $450,000.
Average first-home buyer loans have risen by nearly $50,000 since the government expanded its 5 per cent Deposit Scheme in October 2025, according to Primara Research analysis of Bureau of Statistics data. About 102,000 Australians used the scheme after the expansion. Research head Peter Drennan said an extra $587 a month in repayments makes budgeting harder, especially as interest rates rise. Shadow Housing Minister Andrew Bragg criticised the expansion, while a spokesperson for Housing Minister Clare O'Neil said the scheme helps buyers clear the deposit hurdle.
Brisbane couple Maddison Smillie and Kingston Rapaea bought a three-bedroom townhouse for $550,000 in March 2025, after saving for about seven years. Ms Smillie said they lived modestly, drove an older car and skipped impulse purchases while their friends went out and bought clothes. Their savings reached $90,000, and they used a government 5 per cent deposit scheme, paying $40,000 as a deposit. They spent $10,000 on upgrades and kept the rest as a cash buffer. Ms Smillie urged other young buyers not to assume home ownership is impossible and to speak to a mortgage broker.
First-home buyers in Bass Coast are using a five per cent deposit scheme, with Wonthaggi's affordability and Inverloch's family ties driving demand. A local agent says the scheme helps buyers understand assistance but may not accelerate purchases. Nationally, 102,594 buyers used the scheme in the past year, with Victoria leading at 33,413. The scheme allows eligible buyers to avoid lenders mortgage insurance with a five per cent deposit, though loan approval is still required.
