RBA Warns Low-Deposit Homebuyers Face Negative Equity Risks

The Reserve Bank of Australia reported that first homebuyers utilizing the federal government's 5 percent deposit scheme are more likely to experience negative equity amid declining national house prices. According to the central bank's biannual financial stability report, residential real estate values fell 1.1 percent nationwide in September, following a cash rate hike to a 15-year high.

The bank estimates that a 20 percent drop in housing prices would push approximately 5 percent of all mortgages into negative equity, up from less than 1 percent currently. Despite these risks, the report notes that the overall threat to financial stability remains mitigated by the scheme's structure and the low-risk profiles of most first-time buyers.

Prime Minister Anthony Albanese defended the program, characterizing home ownership as an investment in long-term security and health. Housing Minister Clare O'Neil highlighted the scale of the initiative, noting that more than 100,000 buyers have used the expanded scheme over the past year.