First-home buyers locked out of 169 affordable Queensland suburbs - realestate.com.au

In Queensland, first-home buyers have become effectively excluded from 169 previously affordable property markets since the Federal Government relaxed its 5 percent deposit scheme a year ago. This change, implemented in October 2025, led to a surge of 20,125 buyers taking advantage of taxpayer-supported loans, which significantly increased property values in 852 of the 890 housing markets analyzed.

A report based on data from Realestate.com.au reveals that 91 suburbs in Greater Brisbane and 78 regional areas that previously met the scheme’s price caps have now exceeded those limits. In Brisbane, homes priced under $1 million were eligible for 95 percent loans, but the market has seen drastic increases. For instance, the price of houses in Deagon soared by 31.2 percent, reaching $1.187 million, while apartments and townhouses in Bulimba rose by 20 percent, now priced at $1.2 million.

In the outer suburbs of Brisbane, typical house prices in areas like Woody Point, Rochedale South, and Warner have crossed the $1.13 million mark, with Thagoona experiencing a staggering 58.2 percent increase to $1.375 million. The Gold Coast has also seen family-friendly neighborhoods such as Upper Coomera and Ormeau surpass the price cap, with average prices hitting $1.12 million and $1.13 million, respectively.

Moreover, in regional Queensland, markets in Cairns and Townsville have seen prices exceed the lower $700,000 threshold, highlighting the widespread impact of the price increases. However, the initial frenzy fueled by the scheme has now faced a harsh reality check, as rising interest rates and increasing living costs have created significant hurdles for potential buyers.

Brisbane buyer’s agent Lauren Jones noted that the decline in borrowing capacity has left first-home buyers struggling to enter the market, despite a slight softening in home prices this quarter. “There was a huge spike in first-home buyers, but at the same time, property investors were also entering the market, anticipating rapid increases due to the influx of buyers,” she explained. “Now, first-home buyers are nowhere to be seen.”

Jones indicated that rising interest rates have drastically reduced borrowing power, creating a climate of fear among potential buyers. She added, “The media has them scared, and their parents are hesitant to act as guarantors or provide cash gifts in a market they are wary of.”

Data from Loan Market in October shows that new mortgage applications in Queensland have plummeted by 30 percent since January, with applications from first-home buyers down by 18 percent. McGrath Wilston sales agent Cayle Blaxland confirmed this trend, stating that many first-home buyers have been effectively priced out of the market. He noted that middle-ring townhouses are currently priced around $1.1 million and that most first-home buyers utilizing the scheme are now looking in areas 8 to 9 kilometers away from the city center, such as Everton Park or Chermside, with fewer appearing at open homes at current price levels.

Despite a 10 percent decrease in entry-level market prices from their peaks, Jones observed that properties listed under $1 million are now taking weeks to sell, indicating a shift in the balance of power toward 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 noted. “This is what people were asking for, and now that it’s here, they are nowhere to be seen.”

She also mentioned that many sellers are opting to withdraw their properties from the market rather than accept lower offers. While sales volumes have dropped, those who are still purchasing are facing unprecedented levels of debt. Loan Market figures indicate that while first-home buyer loan numbers have decreased by 1 percent year-on-year, the total value of these loans has increased by 8 percent.

Loan Market credit expert Shay Waraker remarked, “As property prices decline and interest rates rise, buyers are likely exercising caution. With borrowing capacities affected by increasing rates, many may be waiting to see if prices fall further before committing to a purchase.”