Yahoo Finance Aussie mum breaks money taboo after 'life-changing' inheritance: 'Three times my yearly wage'
Mum-of-four George Fox said many Aussies needed generational wealth, such as an inheritance, to purchase a home.
An Aussie mum has revealed the bleak reason why she and many others have been able to buy property. Australia is facing its biggest wealth transfer in history but inheritances are still seen as a taboo topic.
George Fox and partner, Jonty, purchased their first home in rural Victoria in April 2020. The mum-of-four told Yahoo Finance a $85,000 inheritance from her uncle was the “bittersweet” reason they were able to do so.
“I think that’s a life-changing amount of money. I was a single parent at the time and had two children from a former relationship,” Fox said.
“That was probably three times my yearly wage at that point in my life working in early childhood education.”
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The 30-year-old said she was able to buy a car, pay off her debts and go overseas with the inheritance she received and put the remainder towards a home deposit.
She said her partner, who is a plumber, also had the privilege of living at home rent-free with his parents which allowed him to save up for the combined deposit.
Additionally, the public health worker shared they were able to purchase their Birregurra home from a family member for $280,000, which was the property’s bank valuation, and they didn’t have to compete with other buyers.
Fox said the reality for many Aussies was they needed some form of generational wealth to purchase a home. That could be an inheritance, the Bank of Mum and Dad, the ability to live at home rent-free or having a parent go guarantor.
“We've all been told that if you work hard enough, you can buy a home, but I just really don't think that's the case at all. I don't know anyone who hasn't had some type of help in buying a home,” she told Yahoo Finance.
“I think it should be talked about a bit more so we aren’t making other people feel like they aren’t doing enough or working hard enough or we’ve all got the secret to purchasing a home when we’ve all been given help.”
Millions relying on inheritances
Recent research by Finder found more than a third of Aussies - or 7.5 million people - were expecting to receive an inheritance over the coming decades.
Of those, 28 per cent were expecting a cash inheritance of more than $100,000, 20 per cent between $50,000 to $100,000, and 15 per cent up to $50,000. A further quarter said they were expecting to receive one or two properties.
Separate data from the Australian Housing Monitor found nearly two-thirds of Aussies thought the only way they would ever be able to buy a home was if they received a large inheritance.
Think Forward CEO and lead economist Thomas Walker told Yahoo Finance the unfortunate reality was many young people would not be able to purchase a home without an inheritance.
Walker said he and his partner both worked full-time jobs with good incomes but they were only able to purchase their first home, an apartment in Melbourne, due to his mother’s passing.
“She had a house, which we sold and split between me and my two siblings. That enabled the three of us to have a 20 per cent deposit,” he said.
Speaking on ABC's Q&A this week, NDIS Minister Bill Shorten said having rich parents was now "more important than ever" for Aussies wanting to buy property.
“If you have rich parents, if they have a big superannuation account with million bucks and they’ve got a couple of investment properties, then you do not have an intergenerational gap,” he said.
“Having well-off parents has always been a sort of useful head start in life but I think it’s now more important than ever.”
$5.3 trillion wealth transfer to ‘turbocharge inequality’
Australia is facing the biggest intergenerational wealth transfer in history. An estimated $150 billion will be gifted through inheritances this year, according to NAB’s private wealth company JBWere.
This is only part of the estimated $5.3 trillion wealth transfer expected to change hands over the next 20 years across Australia.
“There is an enormous amount of wealth in property and that is going to be handed down in the coming decades to younger generations,” Walker said.
“The problem with that, though, is it is going to turbocharge inequality between generations.”
Fox, whose eldest child is 11 years old, said she was worried about how her kids would get onto the property market.
“Obviously, with me having four children I think I’m probably going to have to do the same thing for them and that makes me really worried because I don’t know how that will look,” she said.
“I think house prices are just going to continue to increase, which is obviously a win when you are building equity, but it’s a total loss when you’re trying to enter the market.”
Fox hopes being open about her situation will help highlight the “broken system” and show the property market wasn’t an equal or fair playing field.
“The more it gets spoken about, the more we can be realistic about how difficult it is to enter the housing market and hopefully it can be a gateway to change,” she said.
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