First Home Deposit Guarantee Drives Lower-Priced Market Growth Across Australia
Australia’s lower-priced housing segment has seen accelerated growth in the past six months, driven by the expanded First Home Deposit Guarantee Scheme. Properties below the scheme’s price caps are outperforming higher-priced homes, highlighting increased competition and affordability pressures for first-time buyers.
Lower-Priced Properties Lead Growth
Analysis from Cotality shows that between October 2025 and March 2026, homes under the scheme’s price caps increased 6.7%, compared with 3.6% growth for properties above the caps. This trend was consistent across most capital cities, with the exception of regional Western Australia and the Northern Territory.
- 6.7% growth for homes under the scheme’s price caps.
- 3.6% growth for properties above the price caps.
- 5.2 percentage point value-growth divergence in Sydney.
Sydney recorded the largest value growth differential, with low-priced homes up 4.1%, while high-priced homes fell 1.1%, a 5.2 percentage point divergence. Darwin had the smallest portion of suburbs under the price cap, at 10.3%, reflecting very limited availability of affordable properties.
Source: Cotality Australia – First Home Deposit Guarantee Market AnalysisRegional Differences and Market Tightness
The scheme has amplified demand for lower-priced properties across Australia, with 81 of 88 SA4 sub-markets, or 92%, showing stronger growth below the price caps. Suburbs with a median house value under the caps fell nationally from 48.6% in September 2025 to 39.5% in March 2026, reflecting rising prices and a shrinking pool of affordable homes.
- 92% of SA4 sub-markets recorded stronger growth below the price caps.
- 39.5% of suburbs remained under the caps nationally by March 2026.
- 48.6% of suburbs were under the caps in September 2025.
Darwin and Perth show the tightest supply constraints. In Darwin, only 10.3% of suburbs have a median house value below the cap, down from 32.4% in September. Perth follows closely with 11.6% of suburbs under the cap. Sydney, despite high prices, has the largest proportion of low-priced suburbs at 46.8%, aided by a higher price cap of $1.5 million.
Source: Cotality Australia – First Home Deposit Guarantee Market AnalysisFinancing Challenges
Rising house values and interest rates are increasingly limiting first-time buyers’ ability to secure finance. The average first-home buyer loan rose 7.7% in the December quarter to $606,400, and borrowers now need to demonstrate mortgage serviceability at rates around 9% or higher due to serviceability buffers and current variable rates.
These constraints are likely to shift first-home buyer demand toward regional markets, outer suburbs, and units, where prices are more accessible.
Sources: ABS – Lending Indicators and Housing Data; Cotality AustraliaOutlook
The expanded deposit guarantee scheme has successfully stimulated demand at lower price points, but rising prices, limited supply, and financing hurdles may reduce its stimulatory effect over time.
The market is likely to see continued competition in affordable segments, with units becoming increasingly attractive for first-home buyers seeking entry points into the market.
Sources: Cotality Australia – First Home Deposit Guarantee Market Analysis; ABS – Lending Indicators and Housing Data