The first-home buyer scheme, which was expanded at the start of October, appears to have turbocharged the growth in house prices that had already been occurring since the Reserve Bank started cutting interest rates in February.
In October, home prices grew by 1.1 per cent nationally - the fastest monthly growth rate since June 2023 - according to property analytics firm Cotality's latest home value index, published on Monday.
While there was still a lack of data about uptake levels for the deposit guarantee scheme, Cotality research director Tim Lawless said it was likely the scheme was amplifying demand.
"It's a pretty clear acceleration that we've been seeing since February, since the start of the rate cuts. But it's fair to say, October does seem to be a bit of a stronger step upwards," he told AAP.
"You'd have to think, without having any numbers from Housing Australia or anything like that, this is going to be adding some further demand to the marketplace at a time when supply levels are already quite scarce."
Anecdotally, the middle to lower end of the market, where suburbs or properties are under price caps for the scheme, had experienced the strongest growth, Mr Lawless said.
The upper quartile of the market was exhibiting the slowest growth across almost every capital city.
The rush of buyers looking to take advantage of the five per cent deposit scheme has left just 47 per cent of suburbs nationwide with median house values below the eligibility threshold in October, down from 51 per cent two months prior.
"It's going to be a program that's probably first in, best dressed," Mr Lawless said.
"The more desirable suburbs, where you still can find a home under the price caps, are going to become scarcer and scarcer."
Perth was the fastest growing capital city, up 1.9 per cent over the month, while Brisbane rose 1.8 per cent and Adelaide 1.4 per cent. Sydney and Melbourne grew 0.7 and 0.9 per cent respectively.
While increased demand was pushing up prices, an underlying lack of supply was still the overwhelming driver of price growth, Mr Lawless said, with listings tracking about 18 per cent below average.
"I wouldn't say demand is shooting the lights out. It's really a supply-driven upswing that doesn't look like is going to be changing any time soon," he said.
Recent planning and zoning reforms by state governments were unlikely to move the dial because builders were still facing severe profitability constraints, Mr Lawless said.
"If the government's serious about getting more supply into the market, they might need to start providing some sort of incentive to the industry, or alleviation in development contributions or builder taxes that might fast-track some of the supply that isn't relying on approvals."
Mr Lawless noted that while the underlying supply shortfall would continue to push up values, falling rate cut expectations, affordability constraints and dampened consumer sentiment might cause price growth to peak earlier than previously anticipated.
12°C