Tougher mortgage lending standards are making it "increasingly difficult" for young first homeowners
Almost two in three parents are willing to make financial and personal sacrifices so their children or grandchildren can get a foot on the property ladder, according to the 2018 Generational Property Ladder Survey commissioned by Homeloans. These sacrifices include delaying retirement, giving up luxuries such as buying a new car, and dipping into their savings.
Conducted last July and participated in by 1,072 respondents from around Australia, the survey also revealed that out of the 65% of parents willing to provide financial assistance, 29% of them are prepared to retire later than planned. The findings align with a report from the Australian Bureau of Statistics (ABS 2017) which found that Australians are delaying their retirement despite a growth in superannuation.
According to Homeloans’ head of marketing Will Keall, “The survey highlights the great lengths parents will go to make owning a home a reality for their children”.
“Due to tougher mortgage lending standards, it’s increasingly difficult for younger generations to break into the property market. To help with this, parents are doing what they can to help their children become first-home buyers, from cutting back on their own spending to going guarantor on a loan,” Keall said.
The survey shows that 39% of parents would willingly live more simply by giving up small luxuries such as dining out and going to the movies, 33% would willingly delay big expenses such as holidays or a new car, 30% would willingly touch their hard-earned savings to provide financial help, and 10% would willingly remortgage to free up cash.
Nearly 50% of the respondents have given cash to help their children or grandchildren acquire a home; 16% of which have given an interest-free loan. For respondents looking to provide a boost, nearly 60% would consider a cash gift and 35% an interest-free loan. More than 45% of parents/grandparents would consider letting their kids stay in the family home while saving for a deposit.
According to Keall, the survey further proves that parents are willing to go the extra mile to help first-home buyers get into the market, particularly in popular metro areas.
“If parents are able to help financially by giving cash or going into partnership on a property, that is clearly the fastest way to help a first-home buyer onto a ladder. However, providing support to help your child save, such as by allowing them to move into the family home temporarily or acting as guarantor on a loan, will also help them to own a home sooner,” Keall said.
One idea Keall suggests to parents with adult children living at home is to charge them board, and then put the money towards a deposit. It will give kids a financial boost, and teach them the discipline of saving.
