Meet the parents giving their kids enough money to buy a home

Steve and Fin Wilkinson plan to give away $300,000, matching their two children’s savings up to $150,000 each when they’re ready to buy a home.

Even though their children both studied law, the Wilkinsons don’t believe their children stand a chance of entering Sydney’s property market without help.

They’re part of a growing cohort of parents stepping in to help their children achieve home ownership as house prices have soared faster than wages. The bank of mum and dad is among the 10 biggest lenders in Australia.

The family bank totalled $39.7 billion by September 2024, on Digital Finance Analytics data, which estimates almost 60 per cent of first home buyers use it, borrowing $108,463 on average.

Parents helping their children bid at Saturday auctions are now a common sight, despairing they could ever save enough for a deposit otherwise. But those who aren’t fortunate to have had such help may be left feeling that hard work is no longer enough to get ahead.

“We don’t want them to spend their entire life chained to trying to get a deposit,” Steve Wilkinson, a 62-year-old retired high school principal turned social worker, said. “And whilst they’re getting a deposit together every year that rolls by, house prices increase 5 or 6 per cent.”

The Orange-based Wilkinsons were able to build a nest egg of their own by leaving Sydney for regional NSW. They benefited from a state government program that offers subsidised homes for teachers in rural communities. And they will inherit money from their parents.

“We also don’t want to hold on to vast amounts of money when we inherit,” he said. “We would rather that money be used earlier so that they can get a foothold in the market.”

He is horrified at what younger generations have to face trying to buy a home. “I actually think it’s a rot in people’s lives to be so indebted for so long,” Steve said.

The Wilkinsons, like other families, think they had it good, and they want to help their children who find themselves living in very different times.

Older Australians had 2.6 times the home equity as younger Australians in 1998. That increased to 3.3 times by 2018, Curtin University research showed.

On Sydney’s northern beaches, 60-year-old disability worker and sole parent Jane Morrisey decided to downsize and help her children sooner rather than later.

Jane Morrisey decided to downsize and help her children.Credit: Wolter Peeters

Morrisey sold her house for four times what she paid about two decades ago. She was able to buy a unit to live in that she will eventually pass on to her son, while she outright bought a townhouse for her daughter.

She does not have money left over for her superannuation, but it doesn’t concern her as she will continue to work.

“I would like them to have done it themselves because we all want to be in charge of our own destiny,” Morrisey said. “I just can’t see how it will happen.”

She said it was easier for her to afford home ownership than her children.

“It seems perplexing that by virtue of being born 35 years ahead of them, I had different opportunities,” Morrisey said.

“They’ve studied, or they’ve gone out and got jobs from a very young age. They’ve even saved diligently, and there’s just no way that they could meet that shortfall.”

In inner-city Melbourne, retired teacher Jennie Gorrie helped both her daughters buy their first homes after she downsized from a two-storey townhouse.

Her 29-year-old daughter with a PhD was struggling to buy a home, and she decided to give her $30,000, which prompted this daughter’s partner’s dad to match it.

She wanted to do the same for her second daughter. Gorrie gave her $37,000, adjusting for inflation.

Jennie Gorrie gave both her daughters a financial helping hand. Credit: Eddie Jim

“Having the confidence of having their own home meant that they could take that next step [of having children],” the 72-year-old retiree said. “I despaired that she [her second daughter] would ever get a place of her own, so I was determined to make sure that she got that.”

Australians who receive even $5000 from parents have four times the chance of achieving home ownership as those who don’t, separate Curtin University research found.

Some parents are in the fortunate position to offer much larger gifts.

Chipkie is a platform that formalises lending money to friends and family. Their bank of mum and dad home loans have an average loan size of $310,000 for a term of 15 to 20 years.

Some parental loans are even larger. “We see up to half a million dollars, believe it or not,” Chipkie founder Michelle Lomas said.

Experts warn the bank of mum and dad phenomenon is fuelling wealth inequality, catapulting Australians back to a time when someone’s prospects were based on the family they were born into.

Dr Laurence Troy, a senior lecturer in urbanism and the director of the AHURI research centre at the University of Sydney, said the Baby Boomer generation did not fall into such vast amounts of home equity by accident but rather by design.

“The housing wealth the current Baby Boomer generation are benefiting from was in large part underpinned by governments developing housing and shoring up the house development systems which enabled them to buy housing and buy land,” Troy said.

That generation benefited from improvements in wages and conditions thanks to labour protections after World War II, he said.

He said housing tax concessions fuel speculative investment, while not enough homes have been built for the growing population.

“If we allow people to speculative invest into housing as much as we want we know that is actively working against opportunities of other people,” Troy said. “If you want, on one hand, an egalitarian society based on efforts and equal opportunities then you can’t have both those things.”

Troy said the up to $14 billion a year in tax concessions in negative gearing and capital gains tax discount could be better reallocated to underwrite an expansion in social housing.

“What about all the other kids that don’t have families who can help?” Troy said. “There is a kind of geographic lottery to it.”

The median dwelling value across Australia’s combined capital cities is $1.01 million, Domain figures show, more than doubling since 2012 when it was just below $500,000. Wages have risen less than 40 per cent in the same time.

After house prices detached from wages, home-owning parents from many walks of life are scrambling to do whatever is in their means to help.

On Sydney’s north shore, 72-year-old semi-retired casual teacher Shauna Forrest has taken out several reverse mortgages on her house as well as giving between $30,000 to $50,000 to help three of her four children buy.

Shauna Forrest at her home on Sydney’s north shore.Credit: Wolter Peeters

While she instilled in them to work hard and save from an early age, Forrest did not think they could have bought without help.

“When I bought a house, the ratio between the cost of houses and the cost of renting because I rented for a long time with children, the ratio was more affordable,” Forrest said. “You could save up a deposit.”

Nearly 20 years ago, Forrest helped her daughter buy a Coogee house by putting a reverse mortgage on her own home. Forrest did that again about eight years later to help her son buy an apartment in Waverley. She helped her third son buy a townhouse in Melbourne three years ago with a cash gift to cover stamp duty.

“It’s been a lot harder in my children’s lifetime … Wages have not kept up with the ridiculous prices of housing,” Forrest said.

She said governments should do more to stop housing from becoming even more unaffordable.

Reverse mortgages are becoming more common, allowing parents to tap their war chest of home equity to fund their children’s home purchases as an early inheritance.

Medina Cicak, the chief commercial officer of Heartland Bank, has seen 20 per cent year-on-year increases in reverse mortgages, the bank’s main product, and growth in affluent locations.

“This is the ability for them to still stay in the home that they love. But to be able to use that then and there to support their family,” she said.

They borrow an average of $142,000 at an average age of 73 years in the year to June 2024 on Heartland data.

Inviva chief executive Andre Karney said some products offer cash upfront, a regular income per month, a line of credit, or a split of all three.

Home owners at 60 years of age can borrow up to 20 per cent of their home equity, increasing to 50 per cent by age 90. Interest is only charged on the portion they take out a reverse mortgage on and is settled whenever the property is sold, meaning home owners don’t have to make any extra repayments while living there.

“It’s challenging for the younger generation to get in, and … people are really utilising this product to assist,” Karney said.

In Melbourne’s outer south-east, 68-year-old retired electrician Tony McCall helped two of his three children years ago and has no regrets.

Tony McCall has no regrets about helping his kids buy.Credit: Simon Schluter

He lent about $60,000 to his eldest daughter to buy in Frankston, which she paid back, and he gave the title to one of his investment properties to his son to buy his own investment in South Australia, which the son later handed back.

“I’d do it in a heartbeat again. I think that it was fantastic the way it worked out,” he said, adding they would not have been able to get in without his help.

“It was easy for me. I bought my first home in 1982 in McKinnon, and it was $40,000, which was all I could afford, but wages were going up, as were interest rates. You know, the famous 17.5 per cent and 18 per cent that people bang on about. Nothing compared to what it is today. [Back then] It was much easier to get a house.”