The Australian government's first home buyers' 5% deposit scheme has enabled the purchase of nearly 1,500 properties that were subsequently converted into investments, according to new data. This revelation raises questions about the scheme's effectiveness in helping first-time buyers secure a home, and whether it inadvertently benefits investors instead.
How the 5% Deposit Scheme Works
The scheme, officially known as the First Home Loan Deposit Scheme, allows eligible first home buyers to purchase a property with a deposit as low as 5%, with the government guaranteeing up to 15% of the loan. This reduces the need for lenders mortgage insurance (LMI) and helps buyers enter the market sooner.
However, the latest data reveals that a significant number of these properties have been turned into investments, either through renting out the property or selling it at a profit. This has sparked debate about whether the scheme is achieving its intended purpose of boosting home ownership among first-time buyers.
Key Data and Findings
The report, obtained through a Freedom of Information request, shows that 1,479 properties purchased under the scheme have been converted into investments. This represents a small but notable fraction of the total number of properties bought under the scheme, which has assisted over 30,000 buyers since its inception in 2020.
| Scheme Metric | Number |
|---|---|
| Total properties purchased | 30,000+ |
| Converted to investments | 1,479 |
| Percentage converted | ~4.9% |
The data also shows that the conversion rate is higher in certain regions, particularly in areas with strong rental demand and capital growth. This has led to calls for stricter rules to prevent the scheme from being exploited by investors.

Political and Public Reaction
The opposition has seized on the figures, arguing that the scheme is failing first home buyers. Shadow Treasurer Angus Taylor said, "It shouldn't benefit the wealthy. It should benefit those who genuinely need a leg up into home ownership."
Meanwhile, housing advocates have urged the government to tighten eligibility criteria and introduce measures to ensure that properties purchased under the scheme are used as principal places of residence for a minimum period.
Comparison with Other Schemes
Australia's scheme is not unique; similar programs exist in other countries. For example, Canada's First-Time Home Buyer Incentive and the UK's Help to Buy scheme have also faced criticism for allowing investors to benefit. However, the Australian scheme's design, which relies on a government guarantee rather than a loan, may make it more susceptible to misuse.
Pros and Cons of the Scheme
- Pros: Helps low-deposit buyers enter the market, reduces LMI costs, and stimulates housing construction.
- Cons: Potential for misuse by investors, limited number of places, and may inflate property prices in some areas.
What This Means for First Home Buyers
For genuine first home buyers, the scheme remains a valuable tool. However, the findings highlight the need for careful monitoring and possibly stricter rules to ensure the scheme's integrity. If you're considering using the scheme, it's essential to understand the obligations and potential risks.

Experts recommend that buyers seek professional advice and carefully consider their long-term intentions before purchasing under the scheme. The government has stated it will review the data and consider adjustments to prevent abuse.
Future Outlook and Policy Changes
As the housing market continues to evolve, the government may introduce changes to the scheme, such as extending the minimum residency requirement or adding penalties for early conversion to investment. These changes could impact future applicants, so staying informed is crucial.
In the meantime, first home buyers should explore all available options, including state-based schemes and grants, to maximize their chances of home ownership.
FAQ
Can I use the 5% deposit scheme for an investment property?
What are the penalties for converting a scheme property to investment?
How many places are available under the scheme each year?
In conclusion, the first home buyers' 5% deposit scheme has been a lifeline for many, but the recent data underscores the need for vigilance. Whether you're a first home buyer or a policy observer, staying informed about these developments is key.

Best Products We’ve Tested and Rated

Our testing team has hands-on reviews of budget motherboard, kvm, pc surge protector, closed back headphones, and pc rust. Every option below was compared across price, build quality, and real-world performance, with honest pros and cons. We update these guides regularly as new models arrive, so the recommendations stay current.
Our testing team has hands-on reviews of laptop backpack, cat ethernet cable, antivirus, budget projector, and keyboard switch. Every option below was compared across price, build quality, and real-world performance, with honest pros and cons. We update these guides regularly as new models arrive, so the recommendations stay current.