PropTrack estimates 480 first home buyers in negative equity

• Approximately 480 households using the expanded 5% deposit scheme now owe more than their home's value.
• Negative equity cases reached 1% of scheme participants, rising from 0.2% the previous month.
• Falling property values in major metropolitan areas have reduced equity for recent, highly leveraged buyers.

An estimated 480 Australian households using the federal government's 5% deposit scheme have fallen into negative equity as property values decline, according to research from PropTrack.

This represents 1% of participants who accessed the expanded scheme between October and June, up from 0.2% recorded in the previous month.

"You’d start to be concerned at around 10% to 20% because that’s a fair amount of a loan book for banks as well," said REA Group Senior Economist Luc Redman.

Affected households were predominantly concentrated in higher socio-economic suburbs across Melbourne and Sydney where property price falls have been most pronounced.

The Australian Government expanded the programme by removing income limits, eliminating applicant caps, and raising maximum property price thresholds to assist buyers.

Reserve Bank of Australia modelling indicates that even a 20% drop in overall property prices would leave approximately 5% of total Australian households in negative equity.