Synopsis — ‘Parents are kicking in $200,000 or $1 million’: Home deposit gap widens”
Elizabeth Redman, August 6, 2024 / Sydney Morning Herald
The article highlights the increasing difficulty for Australians to save adequate deposits for home purchases due to escalating property prices and rising interest rates.
Since 2019, the required deposit for an average home in major cities like Sydney and Melbourne has surged by over $100,000, with current figures reaching $332,000 in Sydney and $213,000 in Melbourne. In response to this growing financial strain, many parents are stepping in to assist their children with substantial contributions, often ranging from $200,000 to $1 million.
AMP senior economist Diana Mousina explains that it now takes a dual-income couple nearly a decade to save a 20% deposit, compared to three to four years in previous decades. The shortage of housing supply, exacerbated by the lack of new constructions and increased demand since COVID-19, has further strained affordability.
MortgageWorks director Anthony Roddy notes that while some first-time buyers benefit from state and federal assistance programs, these are often insufficient in high-cost areas. Parents are increasingly acting as guarantors or providing large financial gifts to help their children secure mortgages and avoid lender’s mortgage insurance.
Independent economist Besa Deda adds that, with the combined challenges of rising home prices and interest rates, younger Australians face a tougher path to homeownership, often resulting in longer savings periods or the need to purchase smaller or more distant properties.
The article underscores the pivotal role of family support in helping new buyers overcome significant financial hurdles in today’s challenging real estate market.
In my opinion, the latest insights into the housing market reveal a growing challenge for many prospective homebuyers. As property prices climb and deposit requirements rise, it’s clear that navigating the property market has become more complex than ever. However, amid these challenges, the strong support of family members is making a remarkable difference.
It’s truly heartening to see how many parents are stepping in to assist their children with significant financial contributions towards home deposits. Whether it’s a substantial gift or acting as a guarantor, this kind of support underscores a vital aspect of family life. In today’s market, where securing a deposit can be a daunting task, these gestures are not just about financial assistance; they are a testament to the deep bonds and commitment within families.
Helping with a home deposit or loan repayments is a powerful way for parents to support their children’s dreams of homeownership. It reflects the understanding that family support plays a crucial role in overcoming life’s hurdles. This collaborative effort not only eases the immediate financial burden but also demonstrates a shared commitment to long-term family well-being.
As we navigate these times of rising property costs and economic pressures, the positive impact of familial support cannot be overstated. It’s a reminder that while the market may present challenges, the strength of family connections remains a reliable and comforting anchor.
Original article: Australia housing crisis: Buyers go to parents for financial help as home deposit gap widens (smh.com.au)
