The Coalition says house prices must drop, after Housing Minister Clare O’Neil insisted she wants them to “grow sustainably” when pressed on whether the Government wanted prices to go up or down.

The direction of house prices has become a hot button issue after reports of young people who used the 5 per cent deposit guarantee scheme fearing they would wind up with negative equity in their new property.

But fresh government data shows a majority of people in the scheme have more than 5 per cent equity in their home.

Budget forecasts of the impact of limiting negative gearing to new builds only and changing the capital gains tax discount showed Treasury believes house prices will continue increasing but 2 per cent slower than without the tax changes.

Ms O’Neil said falling prices were “not what the Government wants” when asked how much it wanted them to drop by.

“You’re saying that you don’t want property prices to go down to make it easier for first home buyers, that’s just something that’s happening?” Sunrise host Nat Barr asked.

“What we want to see is sustainable growth,” the minister replied.

Barr: “So you want them to go up?”

“Well, Nat, what we want to see is a sustainable growth,” Ms O’Neil said.

After the exchange, Senator Bragg said the minister should have admitted “the truth that everyone knows” that prices were too high for young people.

“Australians are looking for authentic leadership. They’re over the bullshit,” he said.

“What they want to hear from their politicians are honest answers, and the honest truth is that house prices in this country are too high for young people, and they should go down.”

Treasurer Jim Chalmers later said the Government wasn’t “targeting a particular price or percentage outcome”, it just wanted more first-home buyers to get ther toe into the market.

Government data shows that almost 60 per cent of people who use the 5 per cent deposit scheme in fact have a deposit larger than 5 per cent – but below the 20 per cent needed to avoid paying for mortgage insurance.

Of the 260,000 people who have used the scheme since Labor took government, some 65,000 have transitioned off it because they either got more than 20 per cent equity in their home or sold the property.

Just 13 people have defaulted and needed taxpayers to pay out the loan.

Nearly 70 per cent of participants are ahead on their mortgage repayments.

Auction clearance rates dropped to 54.5 per cent across capital cities last weekend, although Dr Chalmers said this trend had started before the Budget was handed down and should be attributed more to interest rate rises.

The building sector warned that construction needed to have the right settings in order to turbocharge the economy and speed up the delivery of much-needed homes.

“As we saw in yesterday’s build approval’s data, new home building was already on the back foot in the lead up to the May Federal Budget, with approvals falling in both March and April. More needs to be done to not only uplift the economy but also to deliver our roads, hospitals and homes,” Master Builders Australia chief executive Denita Wawn said.