First published 12 Nov 2026, 5:00am
Young homebuyers using Australia’s “most-generous” help-to-buy scheme are facing higher living costs while they risk falling into negative equity as the property market sours.
Herron Todd White national director group risk and compliance Kevin Brogan said many purchasers eligible for the federal government’s 5 per cent deposit scheme were drawn to the parts of Australia’s cities where capital growth prospects were lower, but also where the cost of living can often be higher, making it harder for them to get ahead.
Homebuyers in outer suburban growth areas face lower capital growth potential and higher living costs while grappling with a 95 per cent loan.
First-time buyers were also facing reduced borrowing power as banks raise interest rates.
“Large-scale first-home buyer support has historically led to a significant increase in purchasing, bringing demand for housing forward and resulting in a rapid acceleration of property prices,” Mr Brogan said in HTW’s latest national property report.
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“As a result, new shared equity and loan mortgage insurance backed schemes are exposed to potential losses in a market downturn, particularly as buyers may be purchasing with less personal equity.”
Mr Brogan said scheme-eligible properties that are attractive to first-home buyers are potentially concentrated in more vulnerable markets which have historically shown slower capital growth and are more susceptible to negative equity due to reduced values when market conditions soften.
“The challenge that faces first-home buyers – and indeed recently successful first-home buyers – is quite a lot of the stock that appeals to them might be a bit further away from amenities and infrastructure,” Mr Brogan said.
Kevin Brogan is National Director Group Risk and Compliance with Herron Todd White.
“As they build the more affordable houses, they can be a little bit further out, and it does mean that when the market softens, as it has now, you might be in a position where if you put down a 5 per cent deposit, that disappears quite quickly.”
Mr Brogan said for a first-time homebuyer with a plan not to move for the long run, that risk is not so critical.
“But if you’re looking at this as a stepping stone to something else, you might find yourself in a bit of an awkward spot.”
Mr Brogan said conditions remain favourable for first-home buyers in several markets, but people do need to be wary.
“As prices ease, entry points are becoming more accessible, and a pullback in investor activity is reducing competition at the lower end of the market, where first-home buyers and investors typically compete most directly,” he said.
Buying in an area where local shops are far away from the front door adds to the cost of living for young homebuyers. Picture: Alan Barber
Mr Brogan said those borrowing 95 per cent of a home’s purchase price not only risk seeing their 5 per cent equity disappear quickly in a market downturn, the prospects of lower capital growth in fringe suburbs and wrestling cost of living pressures such as high fuel prices where services are far away makes it more difficult to get ahead paying down the home loan.
First-time buyers need to carefully assess competing factors, Mr Brogan said.
“A lower purchase price today may be attractive but is it an indicator of limited capital growth?” he said
“Properties in fringe locations are more affordable, but are new owners of those properties facing significantly increased living costs as, say, fuel prices remain high?
“If you’re driving a diesel car at the moment, it’s no joke – if you’re a little way out, and the property you’re looking at is 2km away from your nearest shop, you’re going to be in and out of the car, backwards and forwards, and it’s going to cost.”
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