More than 50,000 first home buyers are at risk of losing money after house prices tumbled in some capital cities.
Investors have left the market and buyers aren't biting, leaving house prices, particularly those on the more expensive end, tumbling in the past few weeks.
"We could be talking five to 10 per cent perhaps, depending suburb to suburb," auctioneer Jason Keen told 9News.
The sharp downturn has hit one mortgage-heavy cohort hardest first home buyers, who are now facing negative equity.
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"I regard it essentially as the second worst financial position outside of bankruptcy," Louis Christopher from SQM Research told 9News.
Across Sydney and Melbourne, 50,000 thousand people from have used the government's five per cent deposit scheme.
And that's where experts are tipping prices to drop.
"For those who've bought in a falling market with the maximum leverage, it just compounds the losses," Christopher said.
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This means, for a home bought for $1 million using the government's five per cent deposit scheme, there'd be a $950,000 mortgage on the property.
If that home now drops in value by six percent, it becomes worth $940,000, meaning you're actually carrying negative equity of $10,000.
"Now these changes aren't a level up for young Australians wanting to own a home," Opposition leader Angus Taylor said about Labor's budget proposals for housing.
But Energy Minister Chris Bowen disagrees.
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"There'll be short-term fluctuations in the housing market, but you've got to set your policies for the medium and long-term," he said.
The tip for those in a crunch is don't panic and, if you can, don't sell.
"If there's any way to hold on, hold on," Keen said.
"We know that things can correct themselves."
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