Lower-priced Homes are Heating Up – Here’s What Buyers Need to Know

If you’ve been watching the property market closely, you may have noticed a notable shift: lower-priced homes are now leading the growth race.

Recent housing data shows that properties at the more affordable end of the market are recording stronger value gains than mid- or high-priced homes. In other words, entry-level and budget-friendly houses are seeing demand accelerate faster than their premium counterparts.

Since the federal government expanded the 5% Deposit Scheme in October 2025, analysis from Cotality indicates that homes priced under the scheme’s caps have generally outperformed those above them. In the December quarter alone, median prices rose 3.6% below the cap, compared with 2.4% above it – a clear illustration of where momentum currently sits.

Why cheaper homes are outperforming

There are a few key forces behind this trend:

1. Affordability pressures: With interest rates and living costs still front-of-mind, buyers are prioritising homes within reach rather than stretching budgets.
2. First-home buyer activity: More first-time buyers are entering the market, naturally focusing on lower price brackets.
3. Supply constraints: Limited stock in affordable categories is intensifying competition, pushing prices upward.

What is means for buyers and investors

For buyers, especially first-timers, this trend means acting quickly and being prepared – competition is strongest where homes are cheapest. For investors, it signals that growth opportunities may currently sit in suburbs or segments once considered “entry level,” rather than traditional prestige markets.

The bigger picture

Market cycles shift, but this pattern highlights a consistent truth: demand follows affordability. When borrowing power tightens, attention moves down the price ladder – and that’s exactly where momentum is building right now.

If you’re considering a purchase within the 5% Deposit Scheme cap, get in touch with Finance Industries Australia and I’ll walk you through your eligibility, participating lenders, and what your repayments could look like.

See if you qualify for the 5% deposit scheme