Property values below deposit scheme caps see strong growth in October
The expansion of the Federal Government’s 5% Deposit Scheme in October has coincided with a marked rise in home values, particularly among properties priced below the scheme’s new thresholds, according to property data and analytics provider Cotality.
The scheme, which now offers unlimited places and broader eligibility, allows first-home buyers to secure loans with a 5% deposit and without lender’s mortgage insurance. From Oct. 1, price caps were raised across most regions.
National home values increased by 1.1% in October, the fastest monthly growth since May 2023. This acceleration follows the first interest rate cut in February and is supported by seasonal factors and limited property listings.
Properties valued under the scheme’s new caps outperformed others, a trend that has persisted as affordability pressures push higher-income buyers towards lower-priced segments. However, the degree of outperformance remains within historical norms for most markets.
Certain areas have seen more pronounced effects, notably in Sydney’s Northern Beaches, North Sydney and Hornsby, Eastern Suburbs, Melbourne’s Inner East, and regional centres such as Wide Bay, the Central Coast, and Geelong.
The Cotality Home Value Index, based on property-level estimates, was used to analyse the impact of the scheme. New indices were created to track values above and below the revised price caps, with data available nationally, by capital city, and by region, extending back to December 2009.
In October, dwellings priced within the scheme’s limits rose by 1.2%, compared to 1% for those above, a difference of 22 basis points.
“Lower-value properties have outperformed the higher end of the market for the better part of two years,” said Eliza Owen (pictured top), head of research at Cotality. “Putting that into perspective is important. The 22-basis-point growth differential in October is in the largest 16% of differences going back to December 2009, or a percentile rank of 84%.”
Houses below the price caps saw a 1.3% increase, 32 basis points higher than those above, while units below the caps recorded a 1% rise, 19 basis points above higher-priced units. Both figures represent relatively strong results in historical terms.
Analysis by city and region shows that, with the exception of Hobart and the ACT, all capitals saw stronger growth for properties below the caps. Sydney, Perth, and Darwin recorded particularly high percentile rankings for growth differentials.
Melbourne and Brisbane also saw above-average results, though within historical ranges. In regional areas, Victoria, Western Australia, South Australia, and Queensland experienced notable outperformance among lower-priced properties. However, the previous month saw even stronger results, indicating that other factors may also be influencing these trends.
Regional New South Wales stood out, with home values rising 1% both above and below the caps – an unusually strong result compared to the state’s average monthly growth earlier in 2025.
The most significant outperformance for properties below the caps occurred in lower-value pockets within high-end markets and popular regional centres. Melbourne’s Inner East led the list, with sub-cap properties rising 1.7%, 130 basis points above homes valued over $950,000. Sydney’s Northern Beaches also saw properties below $1.5 million increase by 0.9%, while higher-end homes remained flat.
Geelong and the Central Coast were among the top performers, benefiting from the scheme’s higher capital city price thresholds.
Darwin also featured among the leading markets, though its results may reflect increased investor activity in lower-value properties. Notably, only a small proportion of Darwin suburbs fall below the scheme’s $600,000 cap, which was not increased in October.
While the data indicates a stronger lift for properties below the scheme’s caps, similar trends were evident before the policy’s expansion. “A causal relationship is difficult to establish, but it’s useful to have this perspective,” Owen said.
“It is also worth noting that it might be too soon for the full impact of the expanded scheme to show up in price growth, and the numbers are worth reviewing over time. Ultimately the expansion of the 5% Deposit scheme is one of many factors influencing strong growth at the lower-to-middle end of the market.”
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