Housing markets tumble in capital cities | 9 News Australia

More than 50 ,000 first home buyers are at risk of losing money after house prices tumble in some capital cities.Homeowners in Sydney and Melbourne will be hit the hardest as the government's 5 % deposit scheme backfires into a borrowing nightmare.

A five -bedroom, three -bathroom Art Deco beauty in Killar up in Sydney's lower North Shore.At today's auction, this was the result.

Our bid has been a little nervous, a little hesitant, Jessica.We'll pass the property in with no bid today.

Investors have left the market and buyers aren't biting.House prices, particularly on the more expensive end, tumbling in the past few weeks.

We could be talking 5 or 10 per cent perhaps.Very hard to say, depending suburb to suburb.

The sharp downturn has hit one mortgage -heavy cohort the hardest, first home buyers, now facing negative equity.

I regard it essentially as the second worst financial position outside bankruptcy itself.

50 ,000 people from Sydney and Melbourne have used the government's 5 % deposit scheme.That's where experts are tipping prices to drop the most.

For those who have bought into a falling market with the maximum leverage, Well, it just compounds the losses.

So how does this work?Let's say you bought a property for $1 million using the government's 5 % deposit scheme.You'd have a mortgage of $950 ,000.But if the market drops by 6%, it's now worth $940 ,000, meaning an actual loss of $10 ,000.

There'll be short -term fluctuations in the housing market, but you've got to set your policies for the medium and long term.These changes aren't a level up for young Australians wanting to own a home, they're a home ownership lockout.

The tip for those in a crunch, don't panic and don't sell.If there's any way to hold on, hold on, because we know that things can correct themselves.James Wilson, Nine News.