Why some home owners are at risk of slipping into negative equity

Meg Girdler says she would have liked to have seen earlier intervention in the property market. (Supplied: Meg Girdler)

Some who have recently bought into Australia's property market may have slipped into negative equity and owe the banks more than their homes are worth.

A decline in property prices has pulled the government's recently expanded 5 per cent deposit scheme into focus.

The treasurer says he is not worried about those at risk of falling into negative equity, while the prime minister used the first home buyer turnout at a recent auction to prove proposed tax changes were working.

Meg Girdler went all in to buy her small Sydney apartment near the peak of the market in December last year.

The 46-year-old believes her house is now worth less than she paid for it and is at risk of slipping into negative equity, meaning her Marrickville home would be worth less than what she owes the bank.

"I just wanted a home and some stability, so yeah, it's a bit scary," Ms Girdler said.

Sydney property prices have dropped by 2.1 per cent since the November peak according to Cotality data, amid rising interest rates, high inflation and low consumer sentiment.

Ms Girdler says she was lucky to get into the property market in Marrickville. (ABC News: Adriane Reardon)

More recently, the federal government announced changes to negative gearing and capital gains taxes.

Ms Girdler said she was happy the moves were aimed at getting first home buyers into the market, but felt new home owners like herself had been pushed into a precarious situation.

"It's great that investors are being pushed out a little bit. I'm very happy about that," she said.

"What I am a little cross about is the fact that nothing was done [before] this point."

Ms Girdler says her home is small but she's proud to get into the market. (Supplied: Meg Girdler)

While Ms Girdler did not use the government's recently expanded 5 per cent deposit scheme, the recent flatlining in property prices has pulled the program into focus.

The scheme allows first home buyers to borrow up to 95 per cent of the value of a home, within price limits, and avoid costly lenders mortgage insurance through government guarantees.

Buyers who take advantage of lower deposits can be at risk of falling into negative equity. (ABC News: Monish Nand)

Uncertainty has been compounded with the government estimating that its tax changes will see prices grow by about 2 per cent less in the next couple of years compared to no tax changes.

Buyers who take advantage of the lower deposits, where they avoid costly lenders mor