The government's first home deposit scheme, aimed at helping Australians purchase their first property, is facing unexpected challenges as property prices in several major cities have fallen.

More than 50,000 first home buyers could be at risk of losing money because the scheme was designed under the assumption that house prices would remain steady or rise.

The sudden drop in property values has left some participants in negative equity, meaning they now owe more on their mortgages than their homes are worth.Experts warn that the scheme's structure, while well-intentioned, did not fully account for potential market volatility.

Economists suggest that first home buyers should approach such programs cautiously and consider the broader property market trends before committing financially.

The government has yet to announce any measures to mitigate the potential losses for affected buyers, leaving many anxious about their financial future.

This situation highlights the delicate balance policymakers must maintain between encouraging home ownership and ensuring financial stability for first-time buyers.