The expanded 5% Deposit Scheme has helped more first-home buyers enter the market, but it also appears to be creating more competition for properties under the scheme’s price caps.

Since the scheme expanded in October 2025, properties valued below the price caps have increased by 6.7%, compared with just 3.6% for properties above the caps.

And this isn’t just happening in one or two areas. 81 out of 88 markets analysed by Cotality recorded stronger growth below the scheme caps.

Sydney had the biggest difference. Properties below the cap increased 4.1% over six months, while properties above it actually fell 1.1%.

So, what’s happening?

When the scheme expanded, the price caps increased significantly, Sydney and the Illawarra jumped from $900,000 to $1.5 million, while South-East Queensland increased from $700,000 to $1 million. This suddenly gave first home buyers access to a much larger portion of the market.

The scheme is doing what it was designed to do, helping more first-home buyers get into a home sooner. But when we increase the number of buyers without increasing the number of homes available, it can also create more competition and push prices higher.

Once again, it all comes back to housing supply and the lack of.