In 2020, Laura Turner was ready to buy a house. She’d scraped together some savings while living with her parents and had been told she could borrow up to $650,000 from her bank.
But something held her back - she had only just moved to Wollongong from Sydney and wasn’t sure yet if she wanted to call the city home yet.
In the next three years, Turner would go on to outlay more than $130,000 in rent as housing prices boomed around her – from an average house cost of $846,000 in 2020 to $1.12m this year.
Spending as much as $680 a week on rent meant the deposit she saved by living at home until she was 28 dwindled. Suddenly, it would only get her a studio apartment or a place in a caravan park in Wollongong – not ideal for her pets, she says.
Yet Turner makes $113,000 a year working in HR consulting – well above the median salary last year of $67,600. It’s “depressing”, she says, that she can’t afford to buy a home with that income.
Turner says she “sorely regrets” not buying in 2020, which in retrospect felt like her “only window”. She’s now one of many Australians who, without a parental windfall on hand, feel left behind.
“I’ve also spoken to my parents, who literally said I’ll need to wait for my grandmother to die in order to be able to get some money from the family,” she says.
It could be worse. Andy Butler, 36, says there’s absolutely “nothing coming my way”, not from his parents or grandparents.
Even though the successful Melbourne artist describes himself as “really busy” – showing at the Australian Centre for Contemporary Art and headed to New Zealand for a new art exhibition – he also says he’s “really fucking broke”.
“I’m seeing friends buying houses, and they all have inheritances,” he says.
“It’s such a relief for them to actually be able to find some stability, and I am so happy for them. But the reality is that if you don’t have an inheritance, you will not find that stability.
“There’s no pathway to it.”
Then there are the lucky ones. Emma* says she could not have afforded a home without the bank of mum and dad.
Having moved internationally and taken time off work to care for young children, the 37-year-old care worker had minimal savings and faced the skyrocketing house prices when looking for a family home in the Sydney region last year.
“There was no other way we could have afforded to get into the Australian housing market,” she says of the lump sum she and her partner, an animator, were gifted by her parents.
They put the money towards a down payment on a four-bedroom home with a “decent-sized” garden on New South Wales’ Central Coast and made the move early this year.
But a parental windfall is the norm in her group, she says.
“I know one person, of all my friends, who has bought a place of his own accord. He saved and rented out half of his place to pay it off,” Emma says. “Everyone else who owns their own places has had help from their parents.
“Everyone else is renting, and I’m not sure what they will do.”
Older people are getting richer – and so are their adult children, according to data from the Productivity Commission.
Of $1.5tn gifted in Australia between 2002 and 2018, about 90% was in the form of inheritance. The remainder was gifted “inter vivo” or between the living – mostly to people aged around 20 and averaging about $8,000 in total.
Intergenerational bequests – that is, from the dead to the living - more than doubled between 2002 and 2018 to $52bn, the commission’s research paper showed, while intergenerational gifts from parents to their children tripled in value to $12bn.
Joey Moloney, deputy program director at the Grattan Institute’s economic policy program, says the bank of mum and dad is “growing in importance”. It has become so well established that, in 2020, it was by one measure the fifth largest mortgage lender in the nation.
Data compiled by Martin North, principal of Digital Finance Analytics, showed that 26% – or 25,000 – of last month’s first-time buyers received help from parents, making them the nation’s tenth largest lender in June.
First-time buyers were increasingly financially leaning on grandparents and other family members as well as parents, he says, but there is no straightforward way of knowing just how much.
Banks can observe financial support from parents in the form of a guarantor, but beyond that, money passing from parents to kids is generally classed as a gift, he says.
This could look like interest-free lending, early bequests or acting as guarantors. The common denominator is being fortunate enough to have been born to parents with the spare cash to help.
“This leaves behind a cohort of people,” Moloney says, which he says will “create a pretty meaningful longterm inequality concern”.
Has this led to generations of disillusioned Australians who have given up on home ownership?
No, Moloney says.
“It’s the goal for the vast majority of Australians,” he says. “It’s deep in the psyche.”
*Not her real name.
