New data compiled by The Guardian Australia from Housing Australia shows that 50,633 guarantees were issued in the first nine months after the Albanese government expanded the 5% deposit scheme on 1 October 2025.
With the Australian housing market now experiencing a synchronised price correction, a significant share of these buyers would have homes that are now valued below their purchase price. Some Sydney and Melbourne buyers may also be experiencing negative equity, whereby their home’s value is now less than their mortgage.
As illustrated below by Alex Joiner from IFM Investors, Australian dwelling values have merely returned to the same level as November 2025:
Most analysts are now forecasting a significant price correction nationally that will rival or exceed those experienced over the past 20 years, when values nationally declined by around 8%.
Source: Cotality
Louis Christopher, founder and managing director of SQM Research, who has been one of Australia’s most accurate forecasters of home prices, says the market is going through a “painful adjustment”.
However, Christopher is not forecasting a price crash.
“It is an adjustment. It is a painful adjustment. It is not a crash and it is unlikely we’ll have a crash, for one reason – we do not have enough supply of accommodation in this country”, he said.
Other economists are busy downgrading their price expectations.
Trent Saunders, senior economist at CBA, noted this week that “recent outcomes have been weaker than our forecasts”.
Saunders noted that the level of national dwelling values in July was around 2% below CBA’s 3 June forecast.
“Notably, prices are already close to the trough projected in our forecasts, which we had expected to be reached in January 2027”, he wrote.
“The risks to our current 2026 forecasts are therefore heavily skewed to the downside. We will review our dwelling price forecasts in the coming weeks”.
NAB this week also lifted its forecast national decline this year to 5% from 2% a month ago, whereas Barrenjoey head of economic forecasts Johnathan McMenamin said that the downturn “is a sharper and broader downturn than we had expected”.
“At the current rates of decline we’re looking at potential downside risk of 1-2 percentage points”, McMenamin said.
He also noted that unlike previous corrections, the current downturn is national.
“Across the market segments we look at – 90 across regions, dwelling types, price tiers – there are about 54% of markets which are seeing price declines now”, McMenamin said.
“That’s up from one-third of segments three months ago”.
The upshot is that the current price correction has broadened and steepened, and recent first home buyers who borrowed heavily under the expanded 5% deposit scheme are especially exposed.
A significant share are at risk of falling deep into negative equity, with a home worth less than the mortgage.
