Auctioneer Karen Harvey counts down a bid during an auction of a residential property in Hurlstone Park in Sydney, Australia, on May 8, 2021. Lisa Maree Williams/Getty Images
The Reserve Bank of Australia (RBA) has identified first home buyers using the Federal government’s 5 percent deposit scheme as among those more likely to fall into negative equity as house prices decline.
“This includes first home buyers participating in the Australian Government 5 Percent Deposit Scheme.”
Asked about negative equity risks for buyers with small deposits, Prime Minister Anthony Albanese said Labor was “tackling it from every angle.” He argued that Australians achieve better outcomes when they enjoy long-term housing security
“The truth is that when you invest in your home it’s an investment over the long term,” he told reporters in Northern Tasmania.
“It’s an investment in the security that comes from a roof over your head. Having a roof over your head enables you to plan with certainty, to have a family, to invest in education. You get better health outcomes.”
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Housing Minister Clare O’Neil said: “In just one year, more than 100,000 first home buyers have used the expanded 5 percent Deposit Scheme to get the keys to their first home.”
“We’ve got a $47 billion agenda to build more homes, to help renters get a better deal, and to get more Australians into home ownership.”
However, the Reserve Bank cautioned that if housing prices in Australia were to fall by 20 percent, approximately 5 percent of all Australian mortgages would end up in negative equity.
House Prices Continue to Fall
Meanwhile, new data released Oct. 1 shows Australian house values have fallen 5.2 percent below the March 2026 peak.
Brisbane recorded the sharpest monthly fall at 1.5 percent, just ahead of Sydney’s 1.4 percent drop.
Sydney continues to lead the broader correction, with property values now 8.6 percent below their peak. Nearly 97 percent of capital city suburbs recorded declines over the past three months.
Research director Tim Lawless said the sharp drop in sales had wider economic effects.
Lawless also revealed that capital city homes were now taking a median of 39 days to sell compared with 23 days a year ago.
