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An increasing number of Australian households are providing financial assistance to help other family members buy their first home, with some even sacrificing their own retirement plans, new research has revealed.
According to a survey conducted by industry super fund-owned bank ME, 20 per cent of Australian families have provided financial assistance to other family members to help them buy their first home, while 26 per cent of those surveyed indicated that they also received financial assistance from a family member to buy their first home.
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Twenty-eight per cent of respondents who have financially helped a family member buy a home within the past five years said their assistance has affected their level of comfort in retirement, up from 21 per cent of those who provided financial assistance more than five years ago.
The survey revealed the amount being loaned or gifted between family members to buy property has increased from $27,000 on average, prior to the past five years, to $42,000 on average within the past five years.
According to the survey, loans or gifts were the most common form of financial assistance provided, with 22 per cent of respondents stating they received a gift or loan, while 5.0 per cent said they received support through a guarantor.
ME head of home loans Patrick Nolan said the results of the survey provide more proof of the significant impact high house prices are having on Australian consumers.
“That a significant number of Australians are receiving and giving financial assistance to buy a first home, and that an increasing number of givers are doing so at the expense of their retirement, is further evidence of the challenges of house prices, which have risen steeply over the last few decades,” he said.
“It’s becoming increasingly difficult for parents and grandparents to help family members buy a first home while protecting their own retirement plans.”
The research also found a significant increase in interest-based lending between family members when it came to assisting the first-time buyers.
According to the survey, the number of family members who had an interest-based lending arrangement in this scenario within the past five years has increased to 24 per cent, up from 12 per cent more than five years ago.
Mr Nolan said the increase in interest-based lending within families is likely a tactic used by parents to “provide a life lesson about the value of money”.
“[Just as] many parents made their children do odd jobs to earn pocket money, now they’re making them pay interest on the financial help they’re giving to buy their first home,” he said.
[Related: Investors return to property market]
