Liberals are scaring first-home buyers with warnings of negative equity – but experts believe there’s little to worry about
Summary
Housing prices in Sydney and Melbourne have fallen mainly at the expensive end of the market, easing fears that many first-home buyers will owe more on their mortgages than their homes are worth. Experts say that most first-time buyers purchase cheaper homes, which have not dropped much in value, so the risk of negative equity is limited.Key Facts
- Property prices are falling in Sydney and Melbourne, mostly in higher-priced areas.
- Rising inflation, interest rates, and the Middle East conflict have affected housing values.
- First-home buyers often borrow with very small deposits, sometimes helped by government schemes.
- Some Liberal politicians worry that young buyers could face negative equity, which means owing more than their home's value.
- Experts say most first buyers buy from the cheaper 25% of the market, where prices are stable or slightly up.
- There is a risk of negative equity for those who bought near the $1.5 million price limit using 5% deposits.
- Negative equity is mainly a concern if buyers need to sell or refinance quickly.
- Changes in tax rules might reduce investors looking for cheap properties and affect prices.
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