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\u201cCracks are appearing,\u201d<\/strong> Bouris warns, as the country\u2019s housing boom begins to show signs of a much deeper correction.<\/p>\n National dwelling values have fallen almost 5 per cent from their March peak, while Sydney has suffered a 7.1 per cent decline and Melbourne is down 6.5 per cent.<\/p>\n Even markets that had continued to show resilience, including Brisbane, Perth and Adelaide, are now moving backwards.<\/p>\n For Bouris, the problem is not simply falling house prices.<\/p>\n It is what happens when falling prices collide with enormous mortgages, higher repayments, tighter lending and borrowers who entered the market with very little equity.<\/p>\n Homes are now taking longer to sell, with the median property reportedly spending around 38 days on the market, the longest stretch since October 2022.<\/p>\n New loan commitments have fallen by more than 5 per cent over the latest quarter, while investor lending has dropped by more than 10 per cent.<\/p>\n Prices are falling.<\/p>\n Borrowing is slowing.<\/p>\n Buyers are pulling back.<\/p>\n And households are still dealing with the impact of higher interest rates.<\/p>\n That combination is putting increasing pressure on the Australian housing market.<\/p>\n One of the biggest risks sits with recent buyers who entered the market with very small deposits.<\/p>\n Government schemes have increasingly helped Australians buy homes with deposits as low as 5 per cent, allowing younger buyers to enter the market sooner.<\/p>\n Applications from Australians aged 18 to 25 reportedly jumped almost 23 per cent after the scheme was expanded last October.<\/p>\n But small deposits leave borrowers with very little protection when prices fall.<\/p>\n Consider a couple who bought a $900,000 Sydney property with a 5 per cent deposit.<\/p>\n They would have contributed $45,000 and borrowed about $855,000.<\/p>\n After Sydney\u2019s 7.1 per cent decline, that property would be worth roughly $836,000.<\/p>\n Ignoring principal repayments, the couple would owe around $19,000 more than the property is worth.<\/p>\n Their entire original deposit would effectively have been wiped out.<\/p>\n That is the danger of high leverage.<\/p>\n A percentage decline that looks relatively modest on a property chart can represent tens of thousands of dollars for a highly indebted household.<\/p>\n There are also signs that financial stress is beginning to emerge among newer borrowers.<\/p>\n First-home buyers using low-deposit schemes are reportedly experiencing mortgage arrears at a seven-month high, with some groups recording arrears at roughly twice the rate of other borrowers.<\/p>\n In Victoria and Western Australia, first-home buyer arrears have reportedly approached 0.9 per cent, compared with around one-third of that level among non-first-home buyers.<\/p>\n These figures do not suggest that Australia is already experiencing a mortgage crisis.<\/p>\n But they highlight where pressure can appear first.<\/p>\n Recent buyers generally have smaller deposits, less accumulated equity and larger mortgages relative to their assets.<\/p>\n Roy Morgan data has also placed mortgage stress at its highest level since the Global Financial Crisis.<\/p>\n The banking sector is also warning that property prices may have further to fall.<\/p>\n Commonwealth Bank has forecast additional declines of around 6 per cent for Sydney and 7 per cent for Melbourne this year.<\/p>\n HSBC has flagged the possibility of a national peak-to-trough decline of as much as 13 per cent.<\/p>\n Those are forecasts rather than guarantees.<\/p>\n But if falls approach anything like those levels, the impact will not be evenly distributed.<\/p>\n A homeowner who bought 15 years ago may still have substantial equity despite a significant fall.<\/p>\n A young couple who bought recently with only 5 per cent down could see their entire financial buffer disappear.<\/p>\n Falling property prices can eventually make homes more affordable for future buyers.<\/p>\n But cheaper houses do not automatically mean cheaper home ownership.<\/p>\n If interest rates remain elevated and borrowing capacity is reduced, buyers may still struggle to purchase even as property prices decline.<\/p>\n For existing borrowers, meanwhile, a falling property value does not reduce the mortgage.<\/p>\n The debt remains.<\/p>\n Only the value of the asset backing that debt changes.<\/p>\n That is why the current correction matters.<\/p>\n Australia spent years building a housing market heavily dependent on credit, large mortgages and continued capital growth.<\/p>\n As prices rose, the risks were easier to overlook.<\/p>\n Rising values created equity and helped borrowers withstand large debts.<\/p>\n Now prices are moving in the opposite direction.<\/p>\n And as Greek Australian Mark Bouris puts it, the cracks are appearing.<\/strong><\/p>\n Source <\/p>\nThe warning signs are multiplying<\/h2>\n
First-home buyers are particularly exposed<\/h2>\n
Mortgage stress is adding to the pressure<\/h2>\n
More pain could be coming<\/h2>\n
The uncomfortable truth about housing affordability<\/h2>\n
Straight Talk with Mark Bouris \u2013 Property Experts <\/a><\/p>\n