Fears that first-time buyers with tiny deposits will find their mortgages are worth more than their homes may be assuaged by new data showing falling prices are concentrated in the top end of the Sydney and Melbourne property markets.<\/p>\n
Climbing inflation, interest rates and worries about the economic fallout from the Middle East conflict have helped depress housing values<\/a> in the country\u2019s two biggest cities.<\/p>\n CBA economists caused a stir early this month when they predicted values in 2026<\/a> would eventually fall by 6% to 7% in Sydney and Melbourne.<\/p>\n Australia\u2019s affordability crisis<\/a> means first home buyers often borrow at the very limit of their capacities. It takes more than a decade to save a 20% deposit on a median home in Sydney, and new entrants typically find ways to buy with a smaller deposit (like the bank of mum and dad).<\/p>\n And since home prices began falling in Sydney and Melbourne, there have been concerns for potentially tens of thousands of first-home buyers who – often with the help of the government\u2019s 5% guarantee scheme – may soon find they now owe more on the house than it is worth.<\/p>\n A series of Liberal MPs and senators have been quick to raise the alarm for young Australians who, in the words of Liberal MP Andrew Hastie<\/a>, \u201care leveraged up to their eyeballs\u201d and are now \u201clooking down the barrel of negative equity\u201d.<\/p>\n Gerard Burg, Cotality\u2019s head of research, played down these fears.<\/p>\n \u201cIt\u2019s always difficult to know where first home buyers are making a purchase, but we do know that it\u2019s most likely to be in the bottom 25% of the market, just from an affordability perspective,\u201d Burg said.<\/p>\n