Finder survey reveals amount parents are saving to help their children buy a home

The bank of mum and dad is squirrelling away deposits in order to save for a home for their kids a lot younger than most people might think.

Research has revealed staggering savings figures parents are prepared to “gift” their children to get into the property market. Picture: iStock

It’s referred to as the “bank of mum and dad” and has helped thousands of young people enter the property market.

However, on the flip side, many first home buyers have expressed their frustrations at how much help is available to others.

An Australian study has revealed the extent of what many parents are prepared to give their children later in life

Finder’s Parenting Report 2023, which surveyed a number of Australian parents of children aged 12 and under, found many parents are planning to gift a whopping $33,278 on average to put towards a first home deposit.

With home prices, cost of living and rising interest rates, first home buyers are finding it harder to get into the property market.

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Parents in Victoria emerged the most generous, according to the research, and are prepared to save an average of $52,716, followed by parents in South Australia with $44,656 and NSW with $40,191.

Queensland parents were prepared to chip in an average of $36,497, followed by West Australians with $31,076.

However not all parents were keen, or in a position to be able to gift such high figures, with 51 per cent saying they would give $1000 or less.

The average figure of $33,278 is around a third of a 20 per cent deposit required on a house worth just under $500,000.

Finder money expert Sarah Megginson said many young adults would be priced out of the property market without their parents’ help.

Finder’s Sarah Megginson.

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“Many young buyers are struggling to save a sufficient deposit after recent property price increases, and interest rate rises have made it even tougher to qualify for a loan,” she said.

Ms Megginson offered advice to parents in the position to help their children.

“Buying a home also means taking on new responsibilities like managing hefty council rates and strata fees, paying for ongoing repairs and managing your money,” she said.

“Any parents considering offering a financial hand should ask their kids to prepare a household budget, to ensure they’re ready for the commitment.

“Otherwise, the worry is that those who access the bank of mum and dad might be less equipped to handle further rate rises.”

There are other methods for parents to help their children including going guarantor on a home loan, accessing equity in their home or letting adult children live with them rent free while they save for a deposit.

Parents have been advised to make sure they don’t leave themselves short.

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Ms Megginson urged older Aussies to consider themselves first.

“The risk is that the parents who contribute to their children’s property purchase could do so to their own downfall, hurting their retirement fund and potentially running out of money later in life,” she said.

“It’s important to consider whether you are financially secure before helping family members and look for ways to work towards a mutually beneficial outcome.

“For instance, you might pledge to match your kids’ home deposit savings dollar-for-dollar – this gets them into the habit and discipline of saving, and means you don’t have to contribute as much. Also make sure you look at all of the grants, incentives and waivers for first home buyers – these can be worth tens of thousands of dollars.

“The more you give to your children, the less you will have later in life.”

It comes following a report from the Australian Housing and Urban Research Institute Limited on how young adults are saving for homes with ownership rates among younger people declining over the past two decades.

The AHURI surveyed young adults across Sydney and Perth, finding it was not possible for 25-34-year-olds to independently save enough for a deposit.

“The ability to access such family support was found to be the single biggest factor in

supporting entry into home ownership,” the report stated.

“Within the Sydney cohort, and in the context of the most expensive housing market, familial support was an essential component of home ownership transitions in all cases.”

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Originally published as Finder survey reveals amount parents are saving to help their children buy a home