Australia's 5% Home Deposit Scheme Faces Wealthy Use and Risk

Data released by Housing Australia shows that 1,485 of the 1,500 homes bought under the federal 5 percent deposit scheme have been turned into investment properties, and 109 homes are no longer the owners’ primary residence. A couple with a combined income of $674,000 holds the record for the highest‑earning applicants to use the scheme. Since the removal of income caps in October 2025, the programme has been used by 267,098 Australian citizens and 54,043 permanent residents, with only 13 defaults reported.

Critics warn that the scheme leaves many first‑home buyers vulnerable to negative equity. Analysts estimate that around 34,000 purchasers who entered the market with a 5 percent deposit could fall into negative equity if house prices continue to decline, a figure that could rise to over 100,000 by year‑end. The risk is amplified by a series of interest‑rate hikes since the Albanese government took office, increasing mortgage repayments for many households.