Post-Election Property Pulse: What Labor’s 5% Deposit Policy Means for Property Investors
The 2025 federal election reaffirmed the Albanese government’s hold on power, and with it, a clear mandate to address housing affordability. Among the flagship promises was an expansion of the Home Guarantee Scheme, allowing all first-home buyers to enter the market with just a 5% deposit and no Lenders Mortgage Insurance (LMI). While this policy is squarely aimed at owner-occupiers, property investors need to pay close attention.
This isn’t just a housing policy—it’s a catalyst that could reshape the investment landscape in key markets.
The Policy: What Has Changed?
Under the revised scheme, first-home buyers can now purchase with just a 5% deposit, and the government guarantees the remaining 15% to avoid LMI, previously a significant cost barrier. The most notable shift is the removal of income caps and price ceilings, meaning more buyers in high-cost urban areas can participate. Additionally, Labor has committed to building 100,000 homes for first-home buyers over five years, backed by a $10 billion Housing Australia Future Fund.
Sound Property Investment Insights
- Increased Competition for Entry-Level Assets
First-home buyers using the 5% deposit scheme will typically target lower to mid-tier properties—the same segment investors often favour for yield, capital growth, and tenant demand. This could tighten competition in suburbs with sub-$1M median prices, particularly in Western Sydney, South-East Queensland, and outer Melbourne.
Investor takeaway: Rethink acquisition strategies for affordable housing. Focus on locations with long-term infrastructure pipelines that support price appreciation, not just short-term demand surges.
- Price Pressure on Established Housing Stock
Government-backed demand may outpace the rate of new housing supply, especially in tight markets. That’s likely to push up values in key corridors where affordability intersects with amenity and infrastructure.
Investor takeaway: Properties already under management in these areas may benefit from capital uplift. Existing landlords could also explore equity releases to fund new acquisitions ahead of further price movements.
- Rent Demand Could Strengthen
While new stock is being planned, it won’t hit the market immediately. In the interim, rental markets remain undersupplied, and first-home buyers who miss out in competitive markets may stay renting longer.
Investor takeaway: Rental yields are likely to remain robust, especially in high-demand areas adjacent to growth precincts. Investors should consider markets with low vacancy rates and upward rent pressure.
- Opportunities in Urban Infill and Townhouse Developments
As first-home buyer activity intensifies, there will be growing demand for medium-density living, particularly townhouses and small-scale infill developments. These options offer affordability and lifestyle without the sprawl.
Investor takeaway: Sophisticated investors may find development or small-scale project opportunities that align with evolving buyer demand, particularly in well-located urban corridors.
Strategic Outlook
Labor’s housing policy is a bold move aimed at democratising home ownership. For investors, it’s not a threat—it’s a signal. The market is shifting, and with the right strategies, these policy settings could deliver significant upside.
Sound Property remains focused on identifying data-backed opportunities in areas where government policy, infrastructure spending, and demographic shifts intersect. As always, our goal is to help investors build resilient, high-performing portfolios in a changing market.
Contact Sound Property today for a tailored investment strategy that aligns with the new property landscape.