First-home buyers in Sydney and Melbourne have little to no chance in qualifying for the First Home Loan Deposit scheme due to the “ridiculously low” property price caps, an expert said.

The federal government recently released the price caps for the scheme, setting maximum property values of $700,000 in Sydney and $600,000 in Melbourne.

The price caps set in the two capital cities are low enough that most buyers would not qualify or would end up buying a cheap home, said Zippy Financial director and principal broker Louisa Sanghera.

"What I'm scratching my head about is that the scheme was clearly well-intentioned with Sydney and Melbourne would-be property owners top of mind because of the high property prices in both cities," she said

Figures from CoreLogic show that the median house price in Sydney is about $920,000 and the median unit price is $720,000. In Melbourne, according to the index, the median house price is $751,000 and the median unit price is $558,000.  

"The price caps have been set well below the median house prices in both Sydney and Melbourne, with the median unit price in Sydney even above the maximum price allowed under the scheme," Sanghera said.

Also read: Will the deposit scheme boost housing demand?

However, in other capital cities, the price cap is closer to the median house price and even well below the median unit price.

"It does seem that the government has just picked a price out of thin air for Sydney in particular because it doesn't seem to reflect market reality — especially now that prices are firmly there again," Sanghera said.

Sanghera said the government needs to consider lifting the price caps to meet the goal of the scheme.

"They should seriously consider increasing the price caps in Sydney and Melbourne to be more realistic of current market conditions as well as significantly boost the number of guarantees on offer," she said.

The table below shows the current price caps set for the scheme:

First Home Loan Deposit Scheme Price Caps










City or Large Regional Centre









Other Areas