Young Australians are increasingly turning to their parents for financial assistance to enter the competitive housing market, as soaring property prices continue to rise. The issue of the “bank of mum and dad” has shifted greatly. Today’s families are passing on more wealth than ever to get their kids closer to realizing their dreams of homeownership.
According to the most recent data, 60 percent of parents have stopped overprotecting. They’ve moved $100K+ in assets to enable their kids to afford a home. A recent Mozo survey of Aussie parents found you can have a huge impact on your child’s home loan journey. On average, they help with just over $74,040 of the home loan deposit. Record-high national home prices reached an all-time high of $805,000 in April. This represents a 0.2 percent jump since the last month, emphasizing the notable shift within the housing market.
In our largest cities, including Sydney, Brisbane, Adelaide, Perth and Darwin, prices have reached record highs. We know that the cost of living crisis is hitting all communities hard. According to Mozo’s latest nationwide survey, over 55% of our respondents are dipping into their savings just to get by financially. Perhaps most relevantly, 40 percent of respondents indicated they are open to providing financial support to their kids. Of them, 25 percent said they were able to use the money explicitly to buy residential property.
Rachel Wastell, a personal finance specialist at Mozo, gave her opinion on how parents’ attitudes have shifted when it comes to offering financial assistance. She noticed an increasing trend of parents postponing retirement. A majority are increasingly relying on credit cards and personal loans to make ends meet for their kids. “We’re seeing some parents delay retirement, dip into savings, or even rely on credit cards and loans to support their children,” Wastell explained.
The survey showed a huge change in expectations around whether people will have to repay anything. Yet as of 2021, only a third of parents that favored a deposit think it should be repaid. Now, that figure has shot up to 75 percent, a remarkable turnabout of attitude among parents. Most of those who helped—80 percent—said they donated under $100,000.
Richard Schellbach, equity strategist at UBS, provided his insights on the survey results. He focused on the unexpected scope of the trend. “The magnitude and prevalence is possibly stronger than many would have suspected,” Schellbach stated.
Wastell urged would-be lenders to remember their own financial bottom line before coming to the table to help. “Before offering that helping hand, it’s crucial to make sure you’re not relying on high-interest debt and that your own financial future is secure,” she advised.
