When finance commentator Scott Pape—better known as the Barefoot Investor—delivered a pointed critique of the government’s newly expanded first home buyer scheme. Writing in the Daily Mail, Pape accused the policy of fuelling the very problem it claims to solve. “This is a stupid real estate change that is going to push prices even further in Australia,” he warned, predicting an eventual 10% rise in property prices. The timing of his statement, just weeks after the Albanese government’s re-election promise to remove the 20% deposit hurdle for first-time buyers, has reignited scrutiny over Australia’s approach to housing affordability.
The scheme allows buyers to enter the market with a 5% deposit, with the government guaranteeing the rest—removing the need for lenders’ mortgage insurance. At Labor’s campaign launch in Perth, Prime Minister Anthony Albanese put it plainly: “When a young person saves a 5% deposit, my government will guarantee the rest with their bank.” Price caps for eligible properties have been adjusted upwards too: buyers in Sydney can now access homes valued at up to $1.5 million with just $75,000 down, while Queenslanders can look at homes up to $850,000. There’s no cap on participation numbers. Income testing is expected, but Housing Minister Clare O’Neil said the intention is to broaden access to homeownership.
Pape’s concerns tap into basic supply-and-demand dynamics. Easing access to credit without increasing housing stock, he argues, simply heats up competition for a limited pool of homes. His warning follows a similar line he took in 2022, during the Frydenberg-era version of the same idea. That time, he joined Sunrise host David Koch to argue that such schemes inflate demand while leaving the root causes of unaffordability untouched.
Those root causes are now well documented. The 2024 State of the Housing System report found that it takes the average Australian a full decade to save a 20% deposit. In the past five years alone, house prices have surged 39.1%, far outpacing wage growth. Cities like Sydney, Melbourne, and Brisbane continue to attract both internal and overseas migrants, compounding demand. A study published by the Australian Housing and Urban Research Institute in 2024—cited by property group Ironfish—estimated that migration has accounted for around one-third of rental increases since 2003. But as Michael Fotheringham of the Institute noted on 14 April, the effect of migration is often overstated. Structural barriers—land supply, planning restrictions, construction costs—are the real culprits.
The debate has taken its sharpest turns. One post on X by real estate analyst Biko Konstantinos, who shared Pape’s critique, summed up the contradiction: “So a policy designed to help first home buyers will actually screw over all first home buyers?” His replies drew a line through familiar arguments. “So look like you’re helping with housing but actually making housing more expensive?” he wrote, in response to a comment suggesting the government knows full well what it’s doing. Another observer described a cycle of policy inertia: “Run immigration at or above the level of housing construction, restrict the ability to increase housing supply, offer policies to increase demand to buy housing, see housing affordability decline, cry crocodile tears, continue the cycle of insanity.”
The scepticism wasn’t isolated. Another observer predicted “2026—The year of Australia’s sub-prime mortgage crash,” invoking memories of America’s housing collapse. Another posted a cartoon dating back to 2018, showing a politician spruiking a 5% deposit policy as a vote-winner while ignoring its long-term risks. “Everyone else who tried this has gotten hurt,” the caption read.
Policy experts are also questioning the long-term sustainability of the scheme. The Ironfish report, released in December 2024, noted that interest rates, land-use rules, construction delays, and council zoning laws all shape the housing market far more than individual schemes. Among their suggestions was a rent-to-build model, where the government guarantees rental payments to incentivise developers to build affordable stock. Such approaches would help address supply without overheating demand. The report also warned against blaming migration too readily. Cutting migrant intake, it argued, could backfire economically, especially given Australia’s dependence on migrant labour and demographic growth.
To be fair, Labor’s broader housing programme does include supply-side measures. Its $10 billion commitment to build 100,000 homes for first home buyers, plus further investments in social housing and support for low-to-middle-income earners, aims to address longer-term shortages. But many believe it’s too slow to offer relief in the current climate. As the 5% deposit scheme becomes the headline policy, questions arise about whether its unintended consequences will outweigh the intended benefits.
There is, at the heart of this debate, a tension between political ambition and economic arithmetic. The government wants to offer young Australians a shot at homeownership. But lowering the entry barrier without unlocking supply could worsen the very conditions that have made the dream of owning a home so remote. “It’s not accidental. It’s deliberate by intentional design,” one user wrote on X, summarising a deepening distrust. Whether or not that’s true, what’s clear is this: the next generation of buyers might find the door open, only to discover that what lies beyond it has already moved out of reach.
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