First Home Deposit Scheme Falters Amid Plummeting Property Prices: What Buyers Need to Know

Investor retreat and waning buyer interest have led to a noticeable drop in house prices, especially in the luxury segment, over recent weeks.

“We could be talking a decline of five to ten percent, varying from suburb to suburb,” auctioneer Jason Keen shared with 9News.

This significant market downturn has particularly impacted first-time homebuyers, who are heavily reliant on mortgages and now find themselves grappling with negative equity.

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In both Sydney and Melbourne, around 50,000 individuals have taken advantage of the government’s scheme allowing a five percent deposit.

Across Sydney and Melbourne, 50,000 thousand people from have used the government’s five per cent deposit scheme.

And that’s where experts are tipping prices to drop.

“For those who’ve bought in a falling market with the maximum leverage, it just compounds the losses,” Christopher said.

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This means, for a home bought for $1 million using the government’s five per cent deposit scheme, there’d be a $950,000 mortgage on the property.

If that home now drops in value by six percent, it becomes worth $940,000, meaning you’re actually carrying negative equity of $10,000.

“Now these changes aren’t a level up for young Australians wanting to own a home,” Opposition leader Angus Taylor said about Labor’s budget proposals for housing.

But Energy Minister Chris Bowen disagrees.

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“There’ll be short-term fluctuations in the housing market, but you’ve got to set your policies for the medium and long-term,” he said.

The tip for those in a crunch is don’t panic and, if you can, don’t sell.

“If there’s any way to hold on, hold on,” Keen said.

“We know that things can correct themselves.”