Is the bank of Mum and Dad still open for first home buyers?

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Is the bank of Mum and Dad still open for first home buyers?

The bank of mum and dad has left its doors open to help young Australians to get ahead financially and 2020 has been no exception according to the recently released Consumer Pulse Report by Canstar.

And not surprisingly, some adult children have moved home or are staying at home longer than anticipated this year as the COVID-19 pandemic has disrupted jobs and the economy.

Should parents help their children buy their first home?

When it comes to buying a first home there are many ways to go about it, one of which could include seeking help from parents.

The Canstar Consumer Pulse Report reveals that one quarter (25%) of the nation feel parents have an obligation to help their children buy their first home.

One third (33%) of Millennials, those who are most likely looking to buy a property soon, believe that parents have an obligation to help.

This compares to only 14% of Baby Boomers and shows that first time buyers may be disappointed by the lack of support they may receive from their parents when it comes to buying a first home.

How old is too old to live at home?

When asked how old is too old for an adult child to still live at home, Australia agrees that age 33 is the cut-off.

The only demographic to buck this trend is those currently living at home who said the age limit should be 43, up from age 41 last year.

House or HECS?

For first time buyers who have been to university and racked up a HECS/FEE HELP debt, they may question whether that needs to be paid off prior to saving for a deposit.

The Consumer Pulse Report reveals that close to one quarter (24%) of the nation feel first home buyers should pay off university fees before they save for a deposit.

Prospective first home buyers will always be partially driven to buy by fear of missing out, which is a risk that intensifies over time.

If savings are allocated to the repayment of HECS/FEE HELP rather than allocated to a home deposit, home ownership is pushed down the track.

However, home buyers who continue to have HECS/FEE HELP should be aware that this can limit the amount they can borrow and can mean it is worth paying any remaining HECS/FEE HELP when applying for a home loan.

Property price predictions

With property prices bouncing back from a dip earlier in the year and increased Government stimulus packages to support purchases, it paints a positive picture for the housing market in the years to come.

This is reflected with 36% of Australians indicating they expect prices to continue to grow at a steady pace.

Despite the majority (64%) of Australians’ expecting property prices to hold steady or rise in the near future, 17% don’t have a positive outlook for the market and think prices will either ease or crash at some point.

A further 19% are unsure what will happen to property prices in their state over the next two years.

House Prices

Source: Consumer Pulse Report by Canstar.

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.