Government’s 5% Deposit Scheme Drives Near‑1,500 Investment Conversions, Data Shows

Surge in High‑Income First‑Home Buyers

The federal 5% deposit scheme for first‑home buyers has facilitated the purchase of almost 1,500 properties that were later turned into investment homes. The trend appears nationwide, with the latest figures released this month indicating a shift in how the program is being used.

Originally intended to help low‑to‑moderate earners enter the market, the scheme now also benefits Australians earning over $300,000 a year. Labor’s decision to stop excluding high‑income borrowers opened the door for wealthy first‑time buyers to secure 95% loans, effectively leveraging the government’s support for personal investment.

Since the policy change, the number of affluent purchasers using the 5% deposit option has risen sharply. Data released by the Treasury shows that hundreds of individuals in the $300,000‑plus income bracket have accessed the scheme. These buyers often finance the remaining 5% through private savings or family contributions, then convert the property into a rental asset.

Is the Scheme Fueling Investment‑Driven Buying?

Economists note that the increased borrowing power may be inflating property prices in already tight markets. „When high‑income buyers enter the first‑home pool, competition intensifies, pushing prices upward,” said a senior analyst at a Melbourne research institute. The shift also raises questions about the original social equity goals of the program.

Critics argue that the policy is being used as a backdoor to expand investment portfolios rather than to assist genuine first‑time owners. The conversion rate—nearly 1,500 homes turned into rentals—suggests a significant portion of beneficiaries are leveraging the low‑deposit loan for profit. Housing advocates warn that this practice could reduce the availability of affordable homes for younger families.

Supporters counter that the scheme’s broader eligibility encourages a more inclusive market, allowing a diverse range of earners to own property. They point to the economic stimulus generated by increased home ownership and the rental supply added by converted properties. The debate continues as policymakers weigh the benefits of broader access against the risk of market distortion.

The long‑term impact remains uncertain. If high‑income buyers continue to dominate the scheme, affordable housing could become scarcer, prompting calls for stricter income caps. Conversely, maintaining the current framework may sustain the modest boost to home‑ownership rates and rental stock. Future revisions will likely hinge on political pressure and emerging housing data.

Frequently Asked Questions

What qualifies a buyer for the 5% deposit scheme? First‑time home buyers can apply if they can provide a 5% deposit, meet income and asset thresholds, and intend to occupy the property as their primary residence.

Can high‑income earners still use the scheme? Yes. After Labor removed the upper‑income exclusion, individuals earning more than $300,000 can access the program, provided they meet other eligibility criteria.

Will the government change the income limits again? No official plans have been announced, but ongoing public and political scrutiny may prompt a review of the income caps in upcoming budget discussions.