Since the 5% deposit guarantee scheme expanded in October, one thing has become very clear: demand is at the more affordable end of the market.

New data from Cotality is showing properties valued below the scheme’s price caps have risen 6.7% in the past six months, compared to 3.6% growth for homes above the price caps.

In simple terms, buyers are chasing lower-priced opportunities, creating stronger competition, and that pressure is driving purchase prices.

This is happening across almost every capital city and regional market, except for Regional WA and the NT. Sydney has recorded the most significant split, where homes under the cap rose 4.1% while properties above the cap declined 1.1%.

This shift has most likely arisen because many buyers likely brought forward their purchase plans after the scheme expansion was announced. At the same time, borrowing capacity remains tight, pushing more buyers toward lower-priced homes. Investor demand has also stayed strong, adding pressure in the same markets first-home buyers are targeting.

Not to mention the number of eligible suburbs is also shrinking as prices rise. Fewer areas now sit below the scheme caps, with Darwin recording the smallest share and Perth close behind. Sydney still has a higher share largely because of its $1.5 million cap.

Finance remains another key hurdle. With interest rates above 6% and lenders assessing repayments at 9% or more, many first-home buyers are struggling to qualify.

Looking ahead, demand is likely to keep shifting toward outer metro areas, regional markets, and units, where affordability is more achievable.