Australia’s housing market is on fire, and a controversial government scheme is being blamed for fanning the flames. The latest data reveals the fastest monthly house price rise in over two years, leaving many to question whether Labor’s five per cent deposit scheme for first-home buyers is doing more harm than good. But here’s where it gets controversial: while the scheme was designed to help young Australians get onto the property ladder, critics argue it’s actually fueling the very crisis it aimed to solve.
In October 2025, national property values soared by 1.1 per cent, according to analytics firm Cotality. This surge comes just a month after the government expanded the scheme, allowing buyers to purchase homes with as little as a five per cent deposit. And this is the part most people miss: the policy’s design—unlimited places, higher property price caps, and no income restrictions—has effectively turbocharged demand without addressing the root issue of limited supply.
UNSW economics professor Gigi Foster didn’t hold back in her critique, telling SkyNews.com.au that the scheme’s structure made higher prices inevitable. “Anyone who’s taken high school economics can see this is a textbook case of demand expansion,” she explained. With housing supply lagging—some councils are reportedly 70 per cent behind their approval targets—Foster argues the policy is mathematically guaranteed to drive prices up. “It’s almost as if the intent was to inflate property values,” she provocatively suggested.
But is this a case of economic ignorance or calculated indifference? Foster poses a stark question: “Why is anyone surprised by rising prices?” She speculates that politicians may either lack basic economic understanding or simply don’t prioritize Australians’ housing struggles enough to craft effective solutions. Housing Minister Clare O’Neil remained silent on the issue, while Prime Minister Anthony Albanese has previously conceded the scheme would exert upward pressure on prices.
Shadow housing minister Andrew Bragg didn’t mince words, accusing Labor of worsening affordability. “They’ve failed to build supply,” he told ABC’s Insiders. “This scheme has single-handedly pushed prices up 1.2 per cent in one month.” The impact was felt nationwide, with Perth leading the charge at 1.9 per cent growth, followed by Brisbane at 1.8 per cent. Even Sydney, with a modest 0.7 per cent rise, saw median house prices hit a staggering $1.25 million.
Across the capitals, dwelling values climbed 5.6 per cent annually, reaching a median of $959,526. Nationally, the median house value stood at $872,538. Experts point to multiple factors, but the glaring gap between supply and demand remains the elephant in the room.
Here’s the burning question: Is Labor’s five per cent deposit scheme a well-intentioned misstep or a deliberate policy failure? And what does this mean for the millions of Australians dreaming of homeownership? Share your thoughts below—this debate is far from over.
