We can’t rely on the bank of mum and dad to fix housing, says O’Neil

Housing Minister Clare O’Neil has vowed to find new ways to boost the supply of housing and curb the soaring cost of construction after warning of a growing social divide if young Australians can only buy their own homes with money from their parents.

In a blunt warning about the way the so-called “bank of mum and dad” can give some home buyers an edge, O’Neil signalled policies to confront what she called an “economic failure” that had created social pressures and growing inequity.

Federal Housing Minister Clare O’Neil is worried about growing inequality driven by people’s inability to break into the housing market.Credit: Penny Stephens

“Everyone recognises that we’ve got to do more, and we’ve got to do more, more quickly,” she said.

In her first in-depth interview since being named to the housing portfolio on July 31, O’Neil warned that young buyers without wealthier parents would be shut out of the market unless all governments acted together to release land and ease building costs.

The government has announced $32 billion in housing measures, including incentive payments to the states to build more homes, since coming to office in 2022, but O’Neil said it was “absolutely” possible to add to these policies to increase supply.

She said Australia was experiencing three intertwining crises: “One in housing supply, as in our country does not have enough homes; the second is in housing affordability – the homes that we have aren’t affordable; and the third is in housing construction.” Governments at all levels needed to step up to address the problem, she said.

O’Neil, who has three young children and revealed she was forced to move out of a rental property while eight months pregnant with her first child, said she understood the pressure on renters, although she stressed she was not comparing her circumstances to those who were less fortunate.

“I absolutely worry about my kids and the experience they will have as young people in this market trying to get housing – and if we don’t do something serious about this now, the problem will inexorably get worse,” she said.

“But I worry, too, about the consequences for our country, which are deep and wide-ranging. This is an economic failure with massive, sweeping social consequences.

“In a country where your capacity to access secure housing depends on your parents’ home ownership, that’s just not a tolerable divide for us to have as a country in the long term, and we need to address it now.”

O’Neil says the housing crisis is an “economic failure”.Credit: Penny Stephens

O’Neil, 43, said she gained some help from her parents when buying her first home and was not critical of those who relied on family to enter the market, but she believed it was unsustainable and untenable for Australian society for so many young people to have to do so.

About 15 per cent of first home buyers relied on money from their parents in the 1980s, according to the Australian Housing Monitor. This has risen to 40 per cent in recent years.

Residential building costs were now 42.6 per cent higher than five years ago, Master Builders Australia said on Friday after checking official figures from the Australian Bureau of Statistics. Key factors included material costs, skills shortages and labour costs.

A separate estimate suggests the bank of mum and dad injected more than $2.7 billion into the property market last year, based on a survey of mortgage brokers by investment and advisory firm Jarden Group.

O’Neil cited Jarden research that estimated three-quarters of first home buyers were helped by their parents and the average level of assistance was $92,000.

“So this is not just a crisis of infrastructure and bricks and mortar – it is raising real questions about what it means to be Australians,” O’Neil said.

“What is increasingly emerging here is a housing market where young people can only access home ownership if their parents have some housing wealth. What’s wrong with the bank of mum and dad? Not everyone has a bank of mum and dad.”

“We are not going to stand for a housing market in this country where people can’t afford to get into it if their parents don’t have housing wealth.”

O’Neil said Labor had increased Commonwealth Rent Assistance payments twice since coming to government to begin easing the crisis, but its medium-term plan to ensure 1.2 million new homes were built by the end of the decade offered a longer-term solution.

Asked about Greens housing spokesman Max Chandler-Mather, whose advocacy for a national rent freeze and other policies has resonated with young people locked out of the housing market – and who has called for Labor to return to the negotiating over Labor’s Build to Rent and Help to Buy housing schemes – O’Neil was blunt.

“There’s a lot of people floating around this problem with a political response, and they are mostly designed to get a political outcome. And my focus just isn’t on the politics. It will be on the crisis, and a bunch of politicians arguing with each other is not going to build a single new home.”

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