Young Australians are increasingly seeking financial help from relatives to enter the property market and manage pressing cost-of-living concerns.
According to new data from UBS economists, 20 percent of Australians provided financial aid to a family member in the past year, marking the highest percentage since this survey commenced six years ago.
Among those who accessed financial support from parents, over half received $5,000 to cover general expenses, while a quarter requested up to $200,000 for property purchases.
Intergenerational wealth
UBS economist Stephen Wu said family help has been pretty key for younger Australians hoping to get a leg up in the property market.
“Australia is a very wealthy country by some metrics, amongst the wealthiest in the world and we know that a lot of that wealth is tied up in housing,” he told SBS World News.
“A lot of these older Australians, so parents and grandparents are actually moving some of this wealth and providing it to their family and members, their children and their grandchildren, such that they are able to meet cost of living pressures and also to get a foot in the housing market.”
Wu explained that this intergenerational wealth transfer is becoming more common.
In the meantime, the cost of living has become less of a concern for Australians.
“We know that income growth has been quite strong. We know that inflation is easing and it’s within the RBA’s inflation target band,” Wu said.
“This suggests that real wages are on the rise again. So, I believe this is a positive indication that the worst may be over, and for younger Australians, this real income boost will help ease cost-of-living pressures.”
However, with property prices predicted to rise, there could be economic angst for some.
“Clearly, there is substantial wealth in the country, and those fortunate enough to receive [family] support are likely to be very appreciative. However, not everyone will have such good fortune,” Wu stated.
First home buyer scheme
The scheme will also remove income and place limits and raise property price caps across most regions.
But as more first-home buyers take advantage of the boosted scheme, demand will also rise, pushing about 100 suburbs outside the scheme’s caps by the end of the year.
Price caps in Sydney will lift from $900,000 to $1.5 million, Melbourne from $800,000 to $950,000 and Brisbane from $700,000 to $1 million.
Adelaide, Perth and Hobart’s caps will increase from $600,000 to $900,000, $850,000 and $700,000, respectively.
Darwin’s cap will remain unchanged at $600,000, while the ACT will have its cap increased from $750,000 to $1 million.
