Why you shouldn’t expect your kids to ‘go it alone’ when it comes to buying their first home
Posted by
Matt Hale
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Baby boomers are a proud bunch. They love to talk about how they worked hard, saved up and bought their own home all by themselves. “Young people just need to learn to make sacrifices,” they say. “If we could do it, then they can too.”
But the harsh reality is that in some housing markets the average house price is now 12 times the average income (compared with twice the average age in the 1970’s). From 1970 to 1997, the average full-time earnings grew at roughly the same pace as housing prices. But since then, while average earnings have grown by 27%, housing prices have grown in real terms by 121%.
What young people are being faced with in the property market today is vastly different to what baby boomers had to deal with in their 20’s and 30’s – that’s just a fact. It’s nothing to do with sacrifice, hard work or independence.
Just this week, a dilapidated 75 square meter house in Sydney’s Surry Hills in which an elderly woman’s body lay undiscovered for years sold for $1.1 million.
The average salary in Sydney is 75 thousand dollars.
Parental financial assistance is no longer confined to wealthy circles, it is something that parents from all walks of life are starting to embrace.
There are a number of options available to parents who wish to assist their children with buying their own property that don’t necessarily involve handing over a huge wad of cash. These include:
- Acting as a guarantor
- Allowing kids to remain in the family home for longer
- Offering rental assistance
More and more the Rising Tide team & Tax Consultants are approached by parents who want to help their kids out but aren’t sure how. Come and chat to our team today and we’ll help you figure out what options are available to you.