First published 25 Oct 2026, 6:00am
First-home buyers Maddi Smillie and Kingston Rapaea bought with a 5% deposit in 2025
First-home buyers have been locked out of 169 historically cheap property markets across Queensland since the Federal Government unshackled its 5 per cent deposit scheme a year ago.
Sweeping changes introduced in October 2025 triggered a rush of 20,125 buyers using taxpayer-backed loans, driving up values in 852 of 890 house and unit markets.
An analysis of Realestate.com.au data shows 91 Greater Brisbane and coastal suburbs and 78 regional hubs that sat at or below the scheme’s caps have breached those limits.
Deagon houses jumped 31.2 per cent to $1.187m
In the capital, where homes priced under $1m were eligible for 95 per cent loans, Deagon houses jumped 31.2 per cent to $1.187m, while Bulimba apartments and townhouses surged 20 per cent to $1.2m.
Across Brisbane’s outer-ring, typical houses in Woody Point, Rochedale South, and Warner surged past $1.13m, while Thagoona jumped 58.2 per cent to $1.375m.
On the Gold Coast, family hubs like Upper Coomera ($1.12m) and Ormeau ($1.13m) also broke the price cap.
In regional Queensland, 10 Cairns markets and 14 Townsville markets smashed through the lower $700,000 threshold.
Places in the 5% deposit scheme were opened wide, with price caps lifted to $1m in Brisbane and $700,000 in the regions
But in a crushing case of market whiplash, that early scheme-fuelled frenzy has slammed into a stark economic wall.
The heavy demand triggered when Prime Minister Anthony Albanese abolished income caps and raised price limits has now collided with interest rate hikes and surging living costs.
Brisbane buyer’s agent Lauren Jones said the resulting drop in borrowing power has left young buyers unable to crack the market, even as home prices softened this quarter.
“There was a huge spike in first-home buyers, but at the time there was also a huge spike in property investors assuming the market would increase very quickly with all these first-home buyers having a lot more money, which it did,” Ms Jones said.
‘Scared’: Buyer’s agent Lauren Jones. Pic: Annette Dew
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Now, first-home buyers are “nowhere to be seen”.
“Interest rates have slashed their borrowing power, the media has them scared, and their parents aren’t willing to go as guarantor or give a cash gift in a market they are fearful of,” she said.
Loan Market October data shows new Queensland mortgage lodgements fell 30 per cent since January, with first-home buyer applications down 18 per cent.
McGrath Wilston sales agent Cayle Blaxland confirmed the drop-off at open homes.
“A lot of first-home buyers have been re-rated out of the market,” Mr Blaxland said, noting middle-ring townhouses currently sit around $1.1m.
Cayle Blaxland of McGrath Wilston says first-home buyers have deserted open homes
“First-home buyers using the scheme are more so in areas 8km to 9km out, like Everton Park or Chermside. I don’t see too many coming through open homes at that level.”
With entry-level market prices softening around 10 per cent from their peaks, Ms Jones said properties under $1m were now sitting listed for weeks, creating an unexpected shift in power for active buyers.
“Borrowing power and fear are keeping them out, but I am seeing great power in negotiating – we haven’t had this power in years,” she said. “This is what people were asking for, and now it’s here, they are nowhere to be seen.”
Borrowing power has been battered by rate rises
She said many vendors were refusing to accept lower offers, opting instead to take properties off the market entirely.
Despite lower sales volumes, those still buying faced record debt burdens. While Queensland first-home buyer loan numbers dipped 1 per cent year-on-year, the value of those loans rose 8 per cent, Loan Market figures show.
“As property prices decline and interest rates increase, buyers are likely exercising caution,” Loan Market credit expert Shay Waraker said.
“With borrowing capacities impacted by increasing rates, buyers may be waiting to see if prices fall further before jumping into the market.”
Loan Market CEO Sam White: Loan numbers are down, but their value has spiked. Picture: Supplied.
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