Around 21 per cent of first home buyers had recently received financial assistance from the ‘Bank of Mum and Dad’, according to a Canstar survey.
Canstar’s editor-at-large and money expert, Effie Zahos, said the troubling economic conditions was likely prompting parents to tighten the purse strings.
“The Bank of Mum and Dad is likely to be shut for some time,” Zahos said.
“With super funds delivering negative returns for the first time in 13 years, inflation yet to peak and interest rates continuing to rise, many parents will be forced to focus on their own financial scorecard.”
Zahos said first home buyers would have to wait for their parents’ support or use this time effectively to build up their savings.
The survey found around two-thirds of parents would like to help their children cover the deposit for a first home, but only one-third of 18-to-34-year-olds had asked or would ask their parents for help.
Government schemes becoming more popular
Many first home buyers are looking at government schemes for their deposit leg-up.
As many as 70 per cent of first home buyers had applied or planned to apply for a state or federal government first home buyer grant or scheme to help with their purchase, the Canstar research revealed.
First home buyers are worried
The soaring cost of living and stagnant wages has many prospective homeowners concerned about their ability to save for a deposit.
Around 42 per cent of the 679 first home buyers surveyed felt “very or extremely stressed” about saving a house deposit, while a further 48 per cent felt “somewhat stressed”.
“There’s a few market forces working against first home buyers right now but, like other buyers before them, there’s always going to be a way to buy,” Zahos said.
“Faced with costly living expenses, rising rents, sky-high property prices, lower borrowing limits, and all of this coupled with little to no wage growth, first time buyers can be discouraged from thinking it’s possible to buy in today’s market.”
She said falling property prices were a “saving grace” for first time buyers who would be looking at the trade-off between lower prices and higher mortgage costs compared to rising rents.
“Striking while the iron is hot and prices are off the boil could be the sweet spot for first home buyers as long as they take a realistic view of the market and buy what they can afford.“
Zahos said it could take a decade to save a 20 per cent deposit for an $800,000 house, and said switching focus to a unit in an entry-level suburb would help people achieve home ownership sooner.
The research revealed the bulk of first home buyers (62 per cent) were aiming to spend between $400,001 and $800,000.
Around 16 per cent were planning to spend $400,000 or less, while 21 per cent were aiming to spend more than $800,000.