Australia’s expanded 5 per cent deposit scheme continues to allow individuals who own property overseas to qualify for assistance, despite the program’s original focus on first-home buyers without prior ownership. Recent data indicates that permanent residents, rather than just citizens, have accessed the scheme in significant numbers since eligibility was broadened in July 2023.

The Housing Australia agency confirmed that property ownership checks apply only to Australian real estate, meaning ownership of foreign property does not disqualify applicants. As of the latest figures, roughly one in six individuals using the scheme are permanent residents, who were only permitted to enter the program starting July 1, 2023. Since that date, approximately 65 per cent of the scheme’s total guarantees were issued, suggesting permanent residents may account for about 25 per cent of recent successful applications.

The overall uptake has reached more than 320,000 people, with permanent residents accounting for over 54,000 applicants. The opposition has expressed concern over these developments. Andrew Bragg, housing spokesman for the Coalition, criticized the scheme’s expanded eligibility and lack of caps on guarantees, arguing that it has intensified competition for housing without addressing supply shortages. He described the approach as an “uncapped demand subsidy” that disrupts genuine first-home buyers’ opportunities.

Bragg also highlighted the perceived inconsistency in the scheme’s prior property test — which considers only Australian real estate — enabling applicants with overseas property to qualify for significant government-backed mortgage guarantees. He called for a review of eligibility rules, saying the lack of restrictions for foreign property owners undermines the program’s intent.

Independent economists offered mixed reactions. Saul Eslake acknowledged the ethical argument against excluding permanent residents, but criticized the absence of a means test to exclude those owning foreign property. He noted that while property prices are higher in Australia than many countries, a blanket disqualification might adversely affect migrants from less affluent nations who have since naturalized.

Similarly, AMP chief economist Shane Oliver said he supports permanent residents’ inclusion but flagged the current regulation as a loophole. He contended that applicants with substantial foreign real estate holdings in countries comparable to Australia should not receive government-backed subsidies through the deposit scheme. Oliver emphasized fairness considerations, noting that government support should prioritize those without existing property assets, regardless of citizenship status.

A government representative defended the scheme’s framework, underscoring that temporary migrants remain ineligible to purchase existing homes or participate in the deposit program. The spokesperson asserted that the Labor government has enforced stricter rules than previous administrations, which they argued had opportunities to act but did not.

This scrutiny comes amid ongoing debate over the scheme’s expansion, particularly following Labor’s removal of income caps in 2025. Critics have raised concerns that some high-income earners are receiving taxpayer-backed assistance for first-home purchases, raising questions about the program’s targeting and long-term impact on housing affordability.