A mixed reception has greeted a newly-implemented scheme to help young Australians shave years off the time to break into the property market but could also drive up house prices.

Labor's five per cent deposit scheme took effect on Wednesday, allowing eligible first-home buyers to get a mortgage with a much smaller deposit and avoid paying for lenders' mortgage insurance.

Some analysts argue the measure will add demand to a hot property market.

The Insurance Council has previously warned it could push up the cost of a home by as much as 10 per cent in the first year.

Treasury modelling suggests the impact will be much smaller at just 0.5 per cent over six years.

But economists, such as CBA's Harry Ottley, said the impact would be more acute on the lower end of the market, where the sc

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