Rapidly rising house prices across Western Australia, and a lack of wage growth to match, means first-home buyers are increasingly relying on the bank of mum and dad to overcome those barriers.
A new study – Understanding the motivations and nature of Australian parents assisting their children to enter the housing market – questioned parents living in Perth, Bunbury and Melbourne, to capture a wide demographic, on what financial support they were providing, and whether there were any expectations in return.
Australian data on parental support has previously been limited, but a 2023 study of 867 potential first homebuyers aged 25 to 34 years in Perth and Sydney found that up to 40 per cent of respondents expected to receive some kind of help.
The new study, from Curtin University, was the first to focus solely on parents and their perspective. All parents included either owned their own home or had previously owned a property.
It found the challenging economic environment for gaining access to first homes was “weighing heavily upon parents who find themselves playing an indispensable role in their children’s home-buying journey”.
Parent-of-two Paul told the study “the children don’t have the expectations that we will help them out, we put the expectations on ourselves that we will help them out,” while parent-of-three Jodie said she believed “rent money is dead money”.
Parents who provided financial support were most commonly giving between $20,000 and $50,000, but one case study was able to provide $1 million to each of his daughters.
One of the daughters also received an additional loan on commercial terms which the father equated to a bank loan – whereby he was acting as the bank.
Researcher Paul Vivian said this was a significant outlier and most parents were helping cover costs including stamp duty or helping bump up deposits to avoid lenders mortgage insurance.
Other participants with more limited economic resources tended to gravitate to indirect financial support such as providing accommodation to help their children save, Vivian said, or offering to become a guarantor.
A few participants had also provided money as a loan, but Vivian said this was only upheld loosely, with no strict timeframes for repayment.
The study also found that while some parents wanted to ensure equal treatment between all their children to avoid conflict, others based the support off individualised circumstances.
While the motives for helping were largely altruistic, there were underlying expectations in some cases including being able to influence where and what was purchased.
Parent-of-three Bruce told the study while it “may be a bit of a selfish motive for giving the money”, it allowed his children to buy closer to where he lived.
“In a way I think it saves a long commute, two grandchildren over and back quickly,” he said.
Vivian said something that surprised him was that parents were also concerned about losing money they had put towards their children’s first homes.
“If they have put tens of thousands into a home, they want their kids to take precautionary actions like a prenup,” he said.
“It was surprising they were thinking that far in advance, or discussing the ‘what ifs’, and it’s largely down to the increased cost of housing, and parents not wanting their kids to fall behind.”
Attitudes also varied based on cultural background, with those of a non-European heritage more likely to feel a sense of duty towards supporting their children financially.
And parents who had received financial help from their own parents were also more likely to want to “pass it on”.
“We’re going to help them out up to about 50 grand … that’s the discussions we’ve had because they’ve known our history, how our parents have helped,” parent-of-three Philip said.
Parents were also motivated by a sense of needing to address a sense of generational unfairness, and the difficulties faced by first-home buyers to access the property market was a common theme.
Several participants commented that it was only through their ability to provide some form of financial support that their children had been able to purchase property and concern was expressed about others who were unable to access generational wealth.
“We used to do a bit of property work, and the numbers that I’ve seen back then versus nowadays, pretty astronomically different … it’s how much the property is and versus your income, something like nine to 10 times the amount versus three times,” parent-of-two Simon said.
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