Tuesday, April 22, 2014

Australia Survey: 1 in 5 home buyers getting help from parents

19% of all buyers, 42% of all first time buyers.

Mum and dad help one in five home buyers
The report found parental assistance is most pronounced in NSW and in Victoria, but is hitting other parts of the country as well. “Affordability is a growing issue in Queensland as well, but it’s a problem across the board,” she said. Of the about 1,200 people surveyed, the report found more than 30 per cent felt they could not afford the mortgage repayments required to get into the market, a similar amount (32.7 per cent) had been renting for five or more years and 50 per cent couldn’t afford a home deposit.
And how many of these parents are dipping into their own housing equity to provide help? Refinances are rising and how scary is it that the money could be just turned back around into housing again. Bubbles are pernicious like that.

Chart of Housing Finance from RP DATA Blog

These longer running bubbles are drawing more victims in. In the U.S. there was a bit of a generational wealth transfer due to the percent of downsizing retirees during the bubble. And banking shenanigans made asking parents for money less necessary. The dot com bubble that preceded the housing bubble had the advantage of smaller reach, hence a faster recovery from the resulting correction. The more players in the game at the time of the correction, the longer and harder that correction will be.

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