The great Australian dream of home ownership may seem unattainable in today’s market, especially for first home buyers and those seeking to upgrade their current homes, however, all hope is not lost. By accessing the bank of mum and dad, kids can buy a home sooner, but it’s not without due consideration.
Australian residential property registered the largest quarterly rise on record to the June quarter of 2021, with the mean price of residential dwellings in Australia rising by $52,600 to $835,700.
A snapshot of our region
| LOCATION | MEDIAN PRICE |
| Ballina | $625,316 |
| Ballina region | $559,303 |
| Bellingen | $915,000 |
| Byron Bay | $1,165,378 |
| Casino | $291,261 |
| Casino Region | $278,374 |
| Coffs Harbour | $717,500 |
| Dorrigo | $499,000 |
| Kyogle | $295,281 |
| Lismore | $344,322 |
| Lismore Region | $605,172 |
| Macksville | $530,000 |
| Nambucca | $567,250 |
| Port Macquarie | $795,000 |
| Sawtell | $1,106,500 |
| Tweed Heads | $548,812 |
Sources: Daily Telegraph, Realestate.com.au,
Our region has also experienced considerable growth with the median price of units in Yamba and Coffs Harbour, New South Wales increasing by 56.6 per cent and by 45.2 per cent respectively. Coffs Harbour’s picturesque Sapphire Beach has secured 4th in a list of Top 10 Suburbs with a Median Price of $1million. Twelve months ago the median asking price was $862,881. Since then the median asking price has risen to $1,130,000.
‘With first home buyers taking up to seven years and one month to save for an entry-level house in some parts of Australia, the time to put together a deposit is likely to blow out as prices continue to rise’, according to Shane Oliver, AMP Capital’s chief economist. It’s no wonder there was a 21 per cent increase in guarantor loans in the past year as the bank of mum and dad helped their kids enter the property market.
Five possibilities to help your kids buy a property
- Gifting funds – Low-level risk as it doesn’t require a home to be tied to a loan for security. However, some lenders will require the lump sum to be in the bank account for three to six months before they can purchase a property, and many also require 5 per cent of genuine savings.
- Accessing superannuation – the first home super saver (FHSS) scheme allows first home buyers to save money for their first home inside their super fund. This should help first home buyers save faster with the concessional tax treatment of superannuation.
- Joint ownership – Purchasing as tenants-in-common allows the shares of ownership to vary so yours can be passed on according to the terms of your will.
- Becoming a guarantor – You can limit your guarantee by using a fixed percentage of the equity in your home (e.g.: 20 per cent) to assist your kids to purchase a property, rather than 100 per cent of your home being tied to your child’s investment and their ability to make repayments. Thus you can request to be released from the guarantee when the property has increased in value or that portion of the loan has been paid off. Typically a valuation is required and a partial discharge authority is completed.
- Charging the kids’ board – In addition to teaching your kids about budgeting and fiscal responsibility, if financially possible some parents invest those board payments and gift it back to the kids to be used as a deposit for a property.
For more information contact our Home Loan experts and read our First Home Buyers Guide.
The information in this article is for general purposes only. Please consider seeking independent financial, taxation, or other advice to determine how this information relates to your circumstances.
Brought to you by Richard Hubbard, Business Development Manager, Westlawn.
The information in this article is for general purposes only. Please consider seeking independent financial, taxation, or other advice to determine how this information relates to your circumstances.
Sources:
Australian Bureau of Statistics
