Labor has advanced the start date of the five per cent deposit scheme to October 1. The change eliminates stamp duty for many households and reduces the savings hurdle.
Under the new program, an estimated 70,000 households every year can buy homes worth up to 1.5 million dollars in Sydney, with different limits in other states and territories.
How the Five Per Cent Deposit Scheme Improves Affordability
Previously, first homebuyers often needed a 20 per cent deposit which could equal $160,000 on an $800,000 property.
With the five per cent deposit scheme, buyers can secure a home priced at $844,000 with just $42,000. This removes up to eight years of saving time and avoids $34,000 in lender’s mortgage insurance.
Property Price Caps by Location
The property limits under the five per cent deposit scheme are higher than the previous Home Guarantee Scheme:
- Sydney and Regional NSW: $1.5 million
- Melbourne and Regional Victoria: $950,000
- Brisbane and Regional Queensland: $1.0 million
- Perth: $850,000
- Adelaide: $900,000
- ACT: $1.0 million
- Hobart: $700,000
- Outer regional areas: $400,000 to $800,000, such as Christmas Island capped at $400,000
Benefits for First Homebuyers
The five per cent deposit scheme delivers several advantages:
- Stamp duty savings for eligible buyers
- No income cap, opening the program to more households
- Single parents able to purchase with a 2 per cent deposit
- Faster entry into the property market
Possible Market Impact
The introduction of the five per cent deposit scheme will make home ownership more accessible.
However, experts caution that greater demand could drive property prices upward. Some forecasts suggest a possible rise between 8 and 15 per cent once the scheme is in full effect. Buyers should also consider the effect of interest rate changes on repayments.
