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A new survey by RateCity has revealed that an increasing number of young people are relying on their parents to help them enter the Australian property market.
The figures reveal that one in seven Gen Y Australians need three incomes to be able to afford the repayments that come with a mortgage.
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“A double income doesn’t cut it for a lot of young would-be homebuyers now,” RateCity money editor Sally Tindall said.
“House prices are on the rise, as is cost of living, so it’s really hard to save for a deposit.
“That’s why the bank of mum and dad has never been so popular. It has a good reputation as a lender – with its long borrowing terms, flexible repayment options and sometimes with no interest attached.”
The research found that the biggest barrier to homeownership was salary, with 68 per cent of respondents stating that that’s where they fell short, followed by the cost of living (59 per cent) and rising property prices (55 per cent).
“The cost of renting is a big hurdle too, with one in four people saying it made homeownership out of reach,” Ms Tindall said.
“Interestingly, rent was a bigger barrier for high-income earners, which suggests that some of them could be living beyond their means, but less of a concern for Gen Y, probably because many are choosing to live in their parents’ home for longer.
“While not all parents will be wealthy enough to contribute financially towards the deposit, many are helping out in other ways by going guarantor on the home loan and buying together as ‘co-borrowers’.”
The research also revealed a third of those aged 18-24 believe that they won’t be mortgage-free until they are 55 years or older, with half of those not expecting to be mortgage-free until over 65.
“Lower-income earners expect to be hit hardest, with one in 10 not expecting to pay off their mortgage until 75 or older,” Ms Tindall added.
