SENATOR DEAN SMITH
SHADOW ASSISTANT MINISTER TO THE SHADOW TREASURER
SHADOW ASSISTANT MINISTER FOR THE COST OF LIVING
LIBERAL SENATOR FOR WESTERN AUSTRALIA
24 July 2026
MEDIA RELEASE
LABOR’S EXPANDED FIVE PER CENT DEPOSIT GAMBLE
PUTS THOUSANDS OF YOUNG WA FAMILIES AT RISK OF NEGATIVE EQUITY
The Albanese Government has recklessly encouraged thousands of young Western Australians to take on record levels of debt with almost no equity leaving many first-home buyers in Perth’s outer suburbs dangerously exposed to negative equity as the housing market weakens.
The artificial demand created by Labor’s expanded five per cent deposit scheme – known as the ‘5% Deposit Scheme’ – has fuelled a surge in first home buyer activity, with ABS lending data showing lending to first-home buyers reached a record high $2.22 billion in the March 2026 quarter.
Labor’s 5% Deposit Scheme allows eligible first-home buyers to purchase a home with as little as a five per cent deposit, and eligible single parents and legal guardians with as little as a two per cent deposit, without paying Lenders Mortgage Insurance.
New Housing Australia data for 2024/2025 provides a unique insight into where Western Australians are most exposed to the risk of negative equity.
In the Greater Perth region, the top ten postcodes with the highest concentration of people accessing scheme guarantees were 6112, 6171, 6056, 6210, 6167, 6061, 6430, 6034, 6107 and 6164.
The highest concentration of scheme participants was in Perth’s fast-growing outer suburbs, including Armadale, Baldivis, Kwinana, Ellenbrook, Success, Gosnells – communities where many young families stretched to buy at the peak of the housing market.
During 2024/2025, 3,010 home buyers accessed the First Home Guarantee Scheme across the Greater Perth region and a further 161 across regional Western Australia.
The median purchase price was $551,000 in Perth, with a median deposit of just $30,000, compared with a median purchase price of $385,000 and a median deposit of $21,000 in regional Western Australia.
Those buyers are increasingly exposed as Perth’s housing market cools after reaching record highs, with the latest data revealing a slowdown in Perth property values.
Having reached record highs in recent years, the Perth property market is showing clear signs of cooling with the latest Real Estate Institute of Western Australia (REIWA) reporting the number of homes for sale is now 10.3 per cent higher than four weeks ago and 90.4% per cent higher than a year ago.
Auction clearance rates have fallen to around 23 per cent while REIWA says the housing market has entered a “wait and see” phase as uncertainty surrounding Labor’s changes to negative gearing and capital gains tax weigh son buying confidence.
Cotality has said the property market is now “losing steam” while Morgan Stanley has forecast a five to ten per cent correction in house prices – one of the largest in four decades.
Negative equity risks are particularly acute in Western Australia where many first-home buyers entered the housing market after one of the strongest periods of house price growth in Western Australia’s history.
In Armadale—one of the suburbs with the highest concentration of First Home Guarantee Scheme loans —median house prices have risen by around 161 per cent over the past five years, compared with approximately 80 per cent across metropolitan Perth.
The average owner-occupier home loan in Western Australia exceeded $700,000 for the first time in the March 2026 quarter increasing from $457,000 to $703,000 in just four years.
First home buyer lending in Western Australia hit a record $2.23 billion in the March quarter 2026 compared to $1.79 billion in March quarter 2022 – a 24.5 per cent increase.
The average new mortgage nationally has reached a record $735,000, while households paid $33.6 billion in mortgage interest during the first quarter of 2026.
Australians now spend 5.4 per cent of household income on mortgage interest alone – more than the late 1980s when home loan rates peaked at 18 per cent.
Labor has created the worst of both worlds – driving demand through its expanded five per-cent deposit scheme while undermining confidence with changes to negative gearing and capital gains tax.
Since the establishment of the First Home Guarantee Scheme in 2020, taxpayers have underwritten 99,732 loans nationally with 13,722 or 13.8 per cent of these in Western Australia.
Comments attributable to Liberal Senator Dean Smith:
“Labor has exposed negative equity risks for first-home buyers in Perth’s outer suburbs by encouraging thousands of young Western Australians to take on record debt with almost no equity.”
“First-home buyers in suburbs such as Armadale, Baldivis, Madora Bay, Ellenbrook and Kwinana purchased homes as Perth’s property market experienced extraordinary price growth and are now among those areas most exposed to falling home prices.”
“Labor’s negative gearing and capital gains tax changes have destroyed confidence in the housing market and have exposed young families to financial hardship during a cost-of-living crisis.”
“The average Western Australian home loan has exceeded $700,000 for the first time, leaving many first-home buyers carrying record debt with little financial buffer.”
For a young family who bought with a five per cent deposit, even a modest fall in house prices can wipe out their equity and leave them trapped if unemployment, illness, separation or relocation forces them to sell.”
“A responsible housing policy would increase supply, reduce construction costs and restore confidence, not inflate demand, punish investment and leave young Western Australian families carrying all the risk.”
ENDS
TABLE 1: Regions with the highest Scheme guarantees issued in 2024–25
| Region | Guarantees issued |
| Perth South-east | 797 |
| Ipswich | 1,000 |
| Logan-Beaudesert | 1,098 |
| Australian Capital Territory | 1018 |
| Sydney Parramatta | 850 |
| Melbourne-North-West | 1,169 |
| Melbourne-North-East | 1,410 |
| Melbourne-South East | 2,220 |
| Melbourne-Inner | 1,123 |
| Melbourne-West | 3,200 |
Source: Home Guarantee Scheme: Trends and Insights 2024-25 | Housing Australia
TABLE 2: Scheme guarantees issued, top ten postcodes in Western Australia, 2024-25
| Post Code | Suburbs | Number of Guarantees Issued |
| 6112 | Armadale, Bedfordale, Brookdale, Doobarda, Forrestdale, Harrisdale, Haynes, Hilbert, Mount Nasura, Mount Richon, Piara Waters, Seville Grove, Wungong | 193 |
| 6171 | Baldivis | 158 |
| 6056 | Baskerville, Bellevue, Boya, Greenmount, Helena Valley, Herne Hill, Jane Brook, Koongamia, Middle Swan, Midland, Midvale, Millendon, Red Hill, Stratton, Swan View, Viveash, Woodbridge | 136 |
| 6210 | Coodanup, Dudley Park, Erskine, Falcon, Greenfields, Halls Head, Madora Bay, Mandurah, Meadow Springs, San Remo, Silver Sands, Wannanup | 130 |
| 6167 | Anketell, Bertram, Calista, Casuarina, Kwinana, Mandogalup, Medina, Orelia, Parmelia, Postans, The Spectacles, Wandi | 116 |
| 6061 | Balga, Mirrabooka, Nollamara, Westminster | 109 |
| 6430 | Binduli, Broadwood, Hannans, Kalgoorlie, Karlkurla, Lamington, Mullingar, Piccadilly, Somerville, South Kalgoorlie, West Kalgoorlie, West Lamington, Williamstown, Yilkari | 98 |
| 6034 | Rawlinna | 88 |
| 6107 | Beckenham, Cannington, Kenwick, Queens Park, Wattle Grove, Wilson | 86 |
| 6164 | Atwell, Aubin Grove, Banjup, Beeliar, Cockburn Central, Hammond Park, Jandakot, South Lake, Success, Treeby, Yangebup | 75 |