First-home buyers propel surge in affordable homes after 5% deposit overhaul
The affordable end of the housing market has been the standout performer since the pandemic, and the outlook suggests that 2026 will bring another year of above-market growth, according to fresh analysis from Ray White.
Since the start of 2023, house prices in the bottom quartile have jumped 34% to reach $711,000 nationally, outperforming the median, which climbed 27% to $944,000, and the upper quartile, which rose 25% to $1.37 million.
This momentum is expected to strengthen further with the removal of income caps and the increase in price thresholds under the expanded 5% deposit scheme.
New lending and government data confirm this shift, showing a sharp October spike in first-home buyer activity, especially in the $750k–$1m loan band that lines up closely with the scheme’s price caps.
“The affordable end of the market was the strongest performer since the pandemic, and 2026 is shaping up to be another year of above-market growth,” said Atom Go Tian (pictured), senior data analyst at Ray White Group.
Policy changes unlock more demand
The changes to the 5% deposit scheme represent a significant shift in market accessibility.
Previously, eligibility was restricted to single buyers earning under $125,000 and couples earning under $200,000, with price caps that effectively sidelined a large share of stock in major metropolitan areas.
The November 2024 removal of income caps opened the scheme to a much wider pool of buyers, while the decision to lift price thresholds in line with median house prices in the capital cities brought a substantial segment of the market back within reach. On 1 October, the scheme was further reshaped, helping to intensify demand at the affordable end.
First-home buyer activity climbs
Early signs indicate that first-home buyer activity is already responding to the policy shifts.
Loan Market Group data shows that the 12‑month rolling count of loans lodged by first-home buyers rose steadily from mid‑2023 to mid‑2024, increasing 14% as demand returned after the pandemic. This initial recovery in 2023 reflected improving sentiment after the peak of the rate-hiking cycle, easing rental affordability pressures that made ownership comparatively more attractive, and a gradual stabilisation in household finances as inflation expectations began to moderate.
Activity then plateaued at around 39,000 through to April 2025 before climbing sharply in recent months. The 5% deposit scheme was revised on 1 October, and by November 2025 the rolling count had reached 41,748 – a 7.7% year-on-year increase and the highest level in more than two years.
“Already we are beginning to see an uplift in first-home buyer activity,” Tian said. “Loan Market Group data shows the 12-month rolling count of loans lodged by first-home buyers grew steadily from mid-2023 to mid-2024, rising 14% as buyers returned post-pandemic.”
At the same time, broader mortgage demand has lifted strongly year-on-year, signalling that policy-driven first-home buyers are part of a wider rebound in housing credit and consumer confidence.
Capitals lead broad-based outperformance
The strength at the affordable end is being felt across all major cities, with the lower-priced segment consistently outpacing both the median and upper quartile.
In Perth, affordable prices surged 17.5% over the year, while Brisbane recorded a 15.5% rise and Adelaide 12.8%. In every capital city, the affordable tier has led the market, highlighting the powerful combination of first-home buyer incentives and tight supply at the entry level.
“In every major city, the affordable tier has outpaced both the median and upper quartile, underscoring the demand created when first home buyer incentives collide with limited stock at the entry level,” Tian said.
Analysts warn, however, that this momentum is unfolding in a finely balanced environment: rate-cut hopes have faded, inflation pressures are re-emerging, and policy-fuelled demand is colliding with historically low inventory, amplifying both price risks and affordability challenges.
Window of opportunity – and rising competition
With the scheme’s expanded reach, the key issue for aspiring buyers has shifted from whether they can access the market to how quickly they can secure a property.
“For first-home buyers, the window is open, but the trade-off is clear: easier access to finance, but stronger competition for the limited stock that qualifies,” Tian said.
