Almost half of recent first-home buyers now hold less equity than their deposit

New data reveals nearly half of recent first-home buyers now hold less equity in their homes than the initial deposit they paid.

The realestate.com.au research shows 48 per cent of first-home buyers who purchased a home since October 2025 are at risk of negative equity if they sell their homes in the short term.

“At this point in time, statistical area level 4 (SA4) regions that recorded an equity percentage of 5 per cent or less hold less value in their home than the deposit paid,” the data found.

“Nationally, that represents 48 per cent of first-home buyer households, though this will likely have rebounded by the time they sell.”

REA Group economist Luc Redman said if unforeseen circumstances struck, recent homeowners would be left vulnerable under current housing market conditions.

“Over the next few months, more and more will slide down that ladder and potentially more and more slip into negative equity,” he said.

“The chances are over the long term, these people won’t be selling within the next five years, but if they’re in arrears, potentially unemployed or these sorts of things come into the equation, then for those households, yes, they are at risk.”

About 48,000 properties have been purchased using the first-home buyer 5% Deposit Scheme since October 2025, according to Housing Australia.

Of those properties, 87 households are in negative equity, representing less than 0.2 per cent of the total first-home buyer cohort during this period.

The REA report also included an analysis that showed most first-home buyers had not fallen into negative equity.

“Provided that households continue to meet repayments, there shouldn’t be any significant implications for first-home buyer mortgage borrowers, the housing market or economy,” the statement said.

Equifax chief solutions officer Kevin James said buyers now had to account for new hurdles under the scheme.

“I think buying where you want to own becomes expensive, certainly in the majors,” he said.

“The price of houses has exceeded the wage growth over the last five years, so there’s still some time before those are going to balance up.”