Falling home prices leave low-deposit buyers owing thousands if forced to sell

The Albanese government expanded the scheme in October last year with the removal of salary caps and increase of price caps. Picture: ABC First-home buyers who purchased units in Sydney and Melbourne’s high-growth pockets using government’s 5 per cent deposit scheme have been warned they face the greatest risk of owing their bank extra money if forced to sell. With home prices in both cities an average of more than 6 per cent below levels reported last year, a significant share of first-home buyers who used small deposits are expected to already be in negative equity. And a new report by property analytics group FoundIt has revealed many of these buyers could sink even deeper underwater financially in the next six months. MORE: What your home will be worth in 2031: all suburbs list The report tracked negative equity risk across regions where homes were eligible for the scheme after its expansion in October last year, showing Sydney’s high-density unit markets and Melboure’s outer housing estates were among the most vulnerable. FoundIt head of research Kent Lardner said negative equity risk would be devastating for those who could not hold onto their properties. “The people genuinel...