Many recent first‑home buyers entered the market with tiny deposits just as property prices started easing and interest rates climbed. When values fall another 5 to 10%, as some forecasts suggest, buyers who borrowed heavily on minimal equity can end up owing more than their homes are worth.
That financial gap does not just hit households. When borrowers walk away, it shifts part of the cost to public funds.
Several federal programmes are designed to help younger and aspiring homeowners get in faster, but they also concentrate risk. The First Home Super Saver Scheme lets buyers salary sacrifice up to $50,000 into super and then withdraw it for a deposit.
The 5% Deposit Scheme requires buyers to put in only 5% while the government guarantees the rest of the standard 20% deposit, and the Help to Buy Scheme allows entry with just a 2% deposit through a government co‑purchase structure. In 2024‑25 alone, 61,281 buyers used the 5% Deposit Scheme to purchase a home.
A large group of borrowers is now highly leveraged in a softening market, which magnifies the risk of negative equity. Under the 5% Deposit Scheme, single parents can buy with just a 2% deposit, increasing access but also leaving almost no buffer if prices slip.
Eligibility settings are generous. Buyers qualify if they are purchasing their first home or have not owned property for 10 years, and permanent residents can apply without needing citizenship.
There is also no income cap, so even someone earning $500,000 a year can still rely on the government guarantee, effectively receiving the same taxpayer backing as far more vulnerable households.
