Property Prices Are Rising — But Your Borrowing Power Might Be Falling
The property market is doing something that catches a lot of people off guard.
Prices are still rising…even in a higher interest rate environment
According to Cotality, Australia’s median property price increased another 0.7% in March.
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It’s a simple but important reminder:
Property prices don’t always fall just because rates rise.
So what’s actually changing?
While prices continue to edge up, borrowing capacity is moving in the opposite direction.
Higher interest rates mean:
- Lower borrowing limits
- Tighter serviceability
- Fewer property options for buyers
That gap — between what things cost and what you can borrow — is where a lot of buyers are feeling stuck right now.
The 5% Deposit Scheme Is Gaining Momentum
To navigate that gap, more Australians are turning to alternative pathways into the market.
One of the biggest? The 5% Deposit Scheme.
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Since launching in 2020:
- 300,000+ Australians have used the scheme
- Around 50% are under 30
- 1 in 5 are key workers (teachers, nurses, emergency services)
What changed recently?
In October 2025, the scheme expanded significantly:
- Income caps were removed
- Property price caps increased
- Participation limits were lifted
Translation: more people now qualify — and for higher-value properties.
How it actually works
Eligible buyers can:
- Purchase with just a 5% deposit
- Avoid Lenders Mortgage Insurance (LMI)
- Use a government guarantee to reduce upfront costs
Why this matters
For most buyers, the biggest barrier isn’t the loan repayments.
It’s the deposit.
And this is where the scheme can make a real difference — bringing forward the timeline to buy by years, not months.
Thinking of Selling? Supply Is the Wildcard
On the other side of the market, things are a little less clear.
Right now, the question many homeowners are asking is:
Do I sell now… or wait?
Why listings matter more than you think
Property prices aren’t just driven by demand — supply plays a huge role.
- More listings → more choice → downward pressure on prices
- Fewer listings → tighter supply → upward pressure
At the moment, we’re sitting somewhere in between.
What the data is telling us
- New listings are rising+3.8% month-on-month
- +5.4% year-on-year
But total listings are still down 6.7% vs last year
So activity is picking up… but supply is still tight.
What happens next?
This is where uncertainty comes into play.
Some sellers may:
- Bring forward their plans — just in case prices soften
Others may:
- Hold off — waiting for more confidence in the market
That decision — across thousands of homeowners — will shape what happens next with prices.
What This Means For You
This isn’t a “good” or “bad” market.
It’s a changing one.
- Prices are rising
- Borrowing power is tightening
- Government support is expanding
- Supply is still constrained
And that combination creates opportunities — if you know where to look.
A Smarter Way to Approach It
Whether you’re:
- Trying to get into the market sooner
- Reassessing your borrowing capacity
- Or deciding whether to sell
The strategy matters more than ever.
Not just what you do — but when and how you do it.
Let’s Talk Through It
If you’re unsure how these shifts affect your position, we can walk through it with you.
From understanding your borrowing capacity to checking eligibility for schemes like the 5% deposit — it’s about making informed, confident decisions.
