Personal finance<\/a> expert Betsy Westcott warned that approximately 22,900 people who purchased homes between October and February \u2014 when the 5 per cent deposit scheme was expanded to include all first home buyers regardless of income or property price \u2014 are in the \u201creal danger zone\u201d of negative equity.<\/p>\n\u201cFor those that have recently bought, it\u2019s a very real danger,\u201d Westcott said on Sunrise.<\/p>\n
Homeowners caught in negative equity face what Westcott described as \u201cmortgage prison\u201d \u2014 being forced to either sell while still owing the bank money, or stick it out and continue to pay down the debt.<\/p>\n
\u201cIt\u2019s not fun, just like it sounds,\u201d she said, adding that rising interest rates make the situation even more precarious by increasing mortgage costs.<\/p>\n
Buyers advised to think long term<\/p>\n
Panos said a market downturn is likely for several reasons.<\/p>\n
\u201cWe\u2019ve got a number of factors happening at the one time. The war, the budget, interest rates have gone up three times and look like they\u2019re going to go up again,\u201d Panos said.<\/p>\n
\u201cAll this means that sentiment is down. Borrowing capacity is down and the absolute possibility of negative equity is there, mainly for people that have borrowed the most amount of money.\u201d<\/p>\n
Despite fears a downturn could trigger an economic crisis, Treasurer Jim Chalmers has defended the market correction as necessary for housing affordability.<\/p>\n
\u201cOur job here is not to target a particular price outcome, our job here is to make sure that there are more affordable options for first homebuyers to get a toehold in at what has been historically a really difficult market,\u201d Chalmers said told ABC Radio on Tuesday.<\/p>\n
\u201cFor too long, the intersection of the tax system and the housing market has locked too many Australians, particularly young Australians, out of housing, and that\u2019s why we\u2019re taking some of these difficult decisions to address that problem.\u201d<\/p>\n
Chalmers has suggested falling clearance rates could open up the market for young Australians, but Panos noted the biggest price drops aren\u2019t occurring in areas where first home buyers typically shop.<\/p>\n
Play Video<\/p>\n
Property markets across this country are at risk of flatlining this year as the impact of the budget sends home values tumbling.<\/p>\n
Property markets across this country are at risk of flatlining this year as the impact of the budget sends home values tumbling.<\/p>\n
Using Sydney as an example, Panos noted price drops are occurring in more expensive areas such as \u201cthe Eastern Suburbs, in Woollahra, in Bellevue Hill, in Neutral Bay.<\/p>\n
\u201cI can\u2019t see first home buyers actually upgrading into a property in Point Piper,\u201d he said.<\/p>\n
Panos advised potential buyers to think long term, suggesting a horizon of three to 10 years rather than one to three years.<\/p>\n
\u201cEven if we get a price correction of 10 per cent, if you can wait it out for a couple of years, that property will go up,\u201d he said.<\/p>\n
\u201cYou\u2019ve got to buy the property, put the contract in your drawer and be prepared not to be looking at it for at least a few years.\u201d<\/p>\n
Panos predicted the downturn could eventually reach the lower-priced end of the property market, particularly in regional areas where investors have built large portfolios.<\/p>\n
\u201cI do see the whole market eventually being impacted and that does mean the lower price point,\u201d he said.<\/p>\n
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![\"Some](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/1deca9167f24a99a8afd73e91737d394ccf88957-16x9-x0y0w1280h720.jpg\")
Some experts are predicting a 10 per cent downturn in the Australian property market. Credit: AAP\u2018Mortgage prison\u2019<\/p>\n