The bank of Mum and Dad has long been the way many first-home buyers get into the market and a new report has found parents are prepared to give their kids $33,000 to get them into a property of their own.
Finder’s Parenting Report 2023, revealed Australian parents of children aged 12 and under are planning to gift their kids $33,278 on average to put towards a first home deposit.
Victorian parents were the ones that were prepared to give their children the biggest helping hand – planning to hand over an average of $52,716.
Parents in South Australia were second at $44,656, followed by NSW with $40,191.
Queensland parents were prepared to give an average of $36,497, while West Australians were happy to contribute $31,076.
Despite some parents being happy to help their adult children enter the housing market, not all of them were prepared to offer financial support.
The survey revealed 51 per cent of parents would give $1000 or less.
According to realestate.com.au, the average figure of $33,278 is about one-third of a 20 per cent deposit required on a house worth just under $500,000.
Finder money expert Sarah Megginson said many young adults need their parents help to get into the housing market these days.
“Many young buyers are struggling to save a sufficient deposit after recent property price increases, and interest rate rises have made it even tougher to qualify for a loan,” Ms Megginson told realestate.com.au.
Ms Megginson said if parents were to offer their children help, they need to make sure they are able to manage their own finances in the current interest rate environment.
“Buying a home also means taking on new responsibilities like managing hefty council rates and strata fees, paying for ongoing repairs and managing your money,” she said.
“Any parents considering offering a financial hand should ask their kids to prepare a household budget, to ensure they’re ready for the commitment.
“Otherwise, the worry is that those who access the bank of mum and dad might be less equipped to handle further rate rises.”
Ms Megginson said the risk is that parents who contribute to their children’s property purchase could do so to their own detriment, hurting their retirement fund and potentially running out of money later in life.
“It’s important to consider whether you are financially secure before helping family members and look for ways to work towards a mutually beneficial outcome,” she said.
“For instance, you might pledge to match your kids’ home deposit savings dollar-for-dollar – this gets them into the habit and discipline of saving, and means you don’t have to contribute as much.
“Also make sure you look at all of the grants, incentives and waivers for first-home buyers – these can be worth tens of thousands of dollars.”
