Canstar's analysis shows that buyer is already exposed following a 5.9% year-to-date price fall recorded by Cotality. If ANZ's full forecast materialises, that buyer could end up in negative equity by as much as 9% by mid-2027, owing an estimated $128,322 more than their home is worth despite keeping up standard repayments over that period. A buyer with a 20% deposit under the same scenario would retain around 8% equity.
The exposure comes as low-deposit lending has surged: APRA data shows banks approved $10.2 billion in new owner-occupier loans with deposits of 5% or less in the six months to March, up 51% on the prior six months and the largest jump on record, coinciding with the uncapping of the government's Home Guarantee scheme.
The modelling is based on ANZ's forecast, released the same day the RBA held the cash rate at 4.35%, which expects Sydney property prices to fall 9.9% this year and a further 2.9% in 2027, taking the peak-to-trough decline to 14.5%.
Applied to Cotality house price data, Canstar estimates the median Sydney house price could drop $236,312 from its January peak to a trough expected next year, bringing it to just under $1.4 million. Melbourne's forecast 12.8% peak-to-trough fall would strip $127,577 from its median house price, while Brisbane, Perth and Adelaide are each tipped to lose between $50,000 and $100,000.
ANZ expects prices to begin recovering in the second half of 2027 as the RBA starts cutting rates.
Sydney is already tracking toward that outcome — Cotality's July data showed the city's monthly fall was among the steepest of any capital, as the broader downturn spreads to previously resilient markets.
Canstar data insights director Sally Tindall said the outlook was particularly concerning for recent buyers with thin deposits.
"If these forecasts prove accurate, some recent buyers in Sydney could find themselves owing the bank more than their home is worth before they've even celebrated their first anniversary as a homeowner," Tindall said.
She said negative equity wasn't necessarily catastrophic for those who could keep meeting repayments, but it removed flexibility.
"The problem is, that negative equity can take away your flexibility. If you need to sell you could be forced to find the cash to cover the shortfall," Tindall said.
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