The Majority Of People Now Get Mum And Dad To Help Buy Their First House

tl;dr get some rich parents.

1. It kinda feels at the moment that there’s never been a worse time to try to get into Australia’s booming housing market for the first time.

20th Century Fox

And if you feel that way, there’s data to back it up.

People’s growth in wages is not keeping up with real estate increases, meaning the Australian average house price ($623,000) is about 7.8 times the average salary ($80,000).

In 1975, house prices were just four times the average salary.

Even if you factor in historically low interest rates and the trend of more joint-income households, getting a mortgage in the current market is still a terrifying thought.

2. That’s where this graph comes in: it shows that for the first time, more than 50% of young Australians are relying on their parents to give them money to buy their first home.

The graph is from economists DFA and uses data from 26,000 household surveys.

3. Not only are half of Australians relying on mum and dad for money to buy their first home, on average they’re getting more than $83,000 in help.

4. The DFA research also found that in recent years that parental help has come ever increasingly in the form of “help with deposit”, with parents acting as “guarantor” on the loan steadily decreasing.

Philip Soos from LF Economics told BuzzFeed News the graph shows how out of reach the housing market is for Australian young people.

“The vested interests [banks and the real estate lobby] have intentionally twisted what is a real problem in terms of housing affordability for first home buyers into a fabricated moral crisis,” said Soos.

“[To them] young people are just narcissistic, they want everything at once, they’re too lazy to work hard to pay down a mortgage, they spend too much buying smartphones and eating out, etc. Any young first home buyer who is searching for their first home knows exactly what I’m talking about.”

5. Soos said, yes, interest rates are lower now than they were in the 1970s, but there are a number of factors prompting first home buyers to reach out to their wealthy parents for help.

“Rising prices results in a larger deposit (think about a 20% deposit on a Sydney house worth a median $1 million), interest rates on savings accounts are too low to assist with accumulating a deposit, a deposit lower than 20% attracts lenders mortgage insurance which can be around $10-15k, rising underemployment and record low nominal wage growth (the lowest since WWII!).”

6. It’s a trend that’s endorsed by the prime minister Malcolm Turnbull. In the national debate around housing affordability and negative gearing, Turnbull joked to a radio host he should “shell out” to help his kids buy a house.

Stefan Postles / Getty Images

7. Here’s how it played out:

Turnbull: “Are your kids locked out of the housing market?”
ABC host: “Yes”
Turnbull: “Well you should shell out for them. You should support them, a wealthy man like you”
ABC host: “That’s what they say”
Turnbull: “Yeah exactly, see you’ve got the solution in your own hands…”

8. Around the same time, Turnbull said the government would not touch tax incentives around housing, holding a press conference praising a couple who’d just bought their one-year-old girl a house.

Dan Himbrechts / AAPIMAGE

9. So if you can’t save up enough money for a housing deposit, think about what the majority of other people are doing… asking their parents for money.

NBC Universal

Check out more articles on BuzzFeed.com!

Mark Di Stefano is a political editor for BuzzFeed News and is based in Sydney.
Contact Mark Di Stefano at mark.distefano@buzzfeed.com.
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