Australia’s Housing Market ERUPTS: Home Prices Skyrocket as Albanese Government’s Deposit Guarantee Scheme Ignites Frenzy
- Median house prices in Sydney have hit a staggering $1.6 million as the government’s deposit guarantee scheme fuels demand
- Perth leads the charge with a 1.9% monthly growth rate, followed closely by Brisbane and Adelaide
- Experts warn of a severe supply shortage, with listings tracking 18% below average, driving up prices
Australia’s housing market has gone into overdrive, with home prices recording their sharpest growth in more than two years. The Albanese government’s deposit guarantee scheme, which was expanded in October, has been credited with turbocharging demand for entry-level homes.
According to property analytics firm Cotality, home prices grew by 1.1% nationally in October – the fastest monthly growth rate since June 2023. The scheme allows first-home buyers to purchase properties with a deposit as low as 5%, sparking a frenzy of activity in the market.
“It’s a pretty clear acceleration that we’ve been seeing since February, since the start of the rate cuts,” said Cotality research director Tim Lawless. “But it’s fair to say, October does seem to be a bit of a stronger step upwards.”
Lawless warned that the scheme is likely to amplify demand, particularly in the middle to lower end of the market. “The more desirable suburbs, where you still can find a home under the price caps, are going to become scarcer and scarcer,” he said.
The data shows that just 47% of suburbs nationwide have median house values below the eligibility threshold for the scheme, down from 51% two months prior. Perth was the fastest growing capital city, up 1.9% over the month, while Brisbane rose 1.8% and Adelaide 1.4%.
While increased demand is driving up prices, Lawless said an underlying lack of supply is still the overwhelming driver of price growth. “I wouldn’t say demand is shooting the lights out,” he said. “It’s really a supply-driven upswing that doesn’t look like is going to be changing any time soon.”
The situation has raised concerns about affordability and the impact on first-home buyers. Lawless said the government may need to provide incentives to the industry to fast-track supply and alleviate development constraints.
As the housing market continues to heat up, experts are warning of a potential peak in price growth. “Falling rate cut expectations, affordability constraints and dampened consumer sentiment might cause price growth to peak earlier than previously anticipated,” Lawless said.