A lot of Aussies are turning to the “Bank of Mum and Dad” to buy their first home, with parents willing to fork out exorbitant funds to help their kids.
Parents with children aged under 12 are planning to gift their children $33,278, on average, to put towards their first home deposit, according to new research by Finder.
That amount is just about a third of the average first-home-buyer deposit ($96,274), based on the average first-home-buyer loan of $481,368.
Victorian parents were the most generous, with plans to gift their adult children $52,716, on average, followed by parents in South Australia ($44,656) and New South Wales ($40,191).
Queensland parents were willing to cough up $36,497, while Western Australian parents said they would gift $31,076.
However, not everyone is prepared to dig so deep into their pockets as half of parents (51 per cent) said they would give their children $1,000 or less.
About 40 per cent of Australians aged 25-34 are expected to reach out to the “Bank of Mum and Dad” to help them buy a property, according to a recent report by the Australian Housing and Urban Research Institute.
Finder money expert Sarah Megginson said, without the help of their parents, many young Australians will simply be priced out of the market.
“Recent property price hikes, combined with interest rate rises, have made it extremely tough for young buyers to save a sufficient deposit, let alone qualify for a home loan,” she said.
“Buying a home also comes with new responsibilities such as managing hefty council rates and strata fees, paying for ongoing repairs and managing your money.”
Megginson said older Australians should make sure they “put their oxygen mask on first” before helping their kids, rather than risk damaging their own retirement fund.
“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.” Megginson said.
“For instance, you might pledge to match your kids’ home-deposit savings dollar-for-dollar, which gets them into the habit and discipline of saving, and means you don’t have to contribute as much.”
Parents should also ask their children to prepare a household budget to help ensure they will b able to handle further rate rises, Megginson said.
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This article first appeared on Over60.